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Copyright 1995 - 2005
A SAMPLE Wholesale Rate Sheet
Note the many restrictions and qualifying guidelines in the right column.
At the bottom of the rate sheet you find lock requirements and deadlines as well as lender fees.
EVERY lender has their own procedures and of course a different format for the rate sheet.
The program requirements often change without notice. Some brokers get rate sheets from over 100 lenders. Imagine how much work it is to look through 100 rate sheets. Obviously, nobody ever does. Most brokers work with just a few reliable lenders on a regular basis.
I used to subscribe to an on-line service listing the programs and rates for over 80 lenders. That service helped, but wasn't without flaws. When rates moved during the day and we got a 2nd round of faxes with rate changes, the on-line service lagged and didn't have the correct rates.
Often the program guidelines were incorrect.
Sometimes lenders would "buy the market" and offered below market rates to attract new business.
But every time the quote was too good to be true, it wasn't true. Instead of electronically transferring the lenders' pricing, data entry people manually entered the rates and subsequent mistakes were unavoidable.
Looking at the rate sheet of just ONE lender, it is obvious how easily mistakes can be made when quoting.
You are only looking at a small portion (the conforming loans) of this lender's programs. Numerous jumbo programs were on the second rate sheet (both faxed every morning) and even the lender's reps and underwriters didn't know all the guidelines without looking at their matrix.
Lenders negotiate special commitments with FNMA and the other investors on the secondary market.
Maximum LTVs, occupancy requirements and many other restrictions and guidelines vary from lender to lender and change as commitments expire or funds run out.
Many lenders will provide brokers with books full of (always changing) program guidelines.
Have the agent provide you with a copy of the rate sheet s/he quoted from.
Along with the completed BayHouse Quote Request the wholesale rate sheet ensures that you won't pay for the agent's oversight if he quoted you the wrong rate because he didn't read those nasty little comments about add-ons.
It may well be that the guidelines change by the time you lock, but I KNOW that many agents purposely "low quote" to get your application going. Once you get the "real" rate it's usually too late to move your loan to another lender/broker.
You just won't know when you were BS'd unless you got that wholesale rate sheet.
Of course it's easy to do the rate and term refi for the borrower with 10 years on the job, excellent credit, never divorced, savings in the bank and ONE single family owner occupied home in good condition at 70% LTV, located in an urban area. At least it sounds easy, although I'm sure there could be circumstances causing a lender to decline this loan.
The rate sheet illustrates how rates and points/rebates are related.
The higher the rate, the higher the rebate paid to the broker.
The negative "(2.0)" next to the rate is the loan fee and means that the broker gets a check from the lender for 2% of the loan amount, or $4,000 on a $200K loan, plus whatever garbage fees the broker charges you for processing etc.
For "no cost" loans you take the higher rate, the broker uses the extra rebate to pay your closing costs.
A positive "1.5" means that the broker's cost is 1.5 points and if he wants to make 2 points, he'll have to charge you a total of 3.5 points or $7,000.