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Showing posts with label economy and business. Show all posts
Showing posts with label economy and business. Show all posts

Thursday, November 1, 2012

The Important Role Of Brokers

Brokers are professionals who play an important role in mediating between a lender and a borrower. Brokers collect personal information about the client for the lender including employment and medical history. They also provide the clients' financial and credit information to the lender.

There are many different types of brokers. Below are the more sought-after brokers:

Mortgage broker: mortgage brokers guide customers through the process of selecting a suitable mortgage package with competitive package offers. They also offer financial advice on mortgage and property. Their job is to find a mortgage package that meets the borrower's needs, and to help the client process and complete their mortgage application form. In the United States, mortgage brokers negotiate over 80% of home loans issued. Banks go through brokers to effectively outsource the job of finding and qualifying borrowers.

Real estate broker: real estate brokers finds buyers for those wanting to sell real estate and finds sellers for those wanting to buy real estate. Real estate brokers help sellers market their property and sell it for the highest possible price; they also help buyers purchase property for the best possible price. Once the broker successfully finds a buyer, the real estate broker receives a commission for his or her service. In the U.S. a 6% commission is usually the case for residential real estate and is usually paid by the seller. This is generally split 50/50 between the listing agent and the selling agent.

Forex broker: forex brokers are firms or individuals, who assist individuals or firms to trade in the foreign exchange market. Forex brokers make money from pip or "spread." A spread is the minimum price increase in currency. For instance, in Euro/US Dollar, a shift from 0.9007 to 0.9008 is one spread. In US Dollar/Japanese Yen, a shift from 127.40 to 127.41 is one spread.

Stockbroker: a stockbroker is a person or company who buys and sells stocks on behalf of another person or company, and tries to match up buyers and sellers. Many people seek the advice of and pay for the services of a stockbroker to help them in making informed decisions about their finances with the knowledgeable and interactive guidance of a licensed stockbroker.

Insurance broker: insurance brokers source contracts of insurance on behalf of their customers. An insurance broker will help you to choose the best to fit your needs.

An investor looking for an investment avenue will benefit greatly from using a broker, as brokers tend to be more up-to-date with trends and happenings in the market. Also as per law the broker has a fiduciary duty to advise the customer in the customer's best interest.


Tuesday, September 18, 2012

Bank of America wasn’t overpaid for servicing right, Fannie Mae audit finds

Fannie Mae didn’t give Bank of America special consideration in agreeing to pay more than $500 million to transfer servicing of 384,000 mortgages to firms more likely to prevent foreclosures, a U.S. auditor said in a report Tuesday.
Still, the taxpayer-owned company paid more than legally required to Bank of America and 12 other lenders when it spent $1.5 billion for servicing rights on 1.1 million loans from 2008 to 2011, the Federal Housing Finance Agency’s inspector general said in the report.
The transfers were part of a Fannie Mae initiative to cut losses on mortgages at greatest risk of default. The specialty servicers hired to handle the loans, including Ocwen Financial and Nationstar Mortgage, typically do more outreach to distressed borrowers and have a better track record of keeping loans current.
“The amount Fannie Mae paid was consistent with the amounts it had paid to other servicers from which it had purchased mortgage-servicing rights under the program,” the report said.
Bank of America ultimately got $421 million in the 2011 deal because some of the loans were paid off or refinanced by the time it was completed.

The transaction drew attention because it came after Fannie Mae had received $1.3 billion from Bank of America to settle claims over defaulted mortgages. House members, including Reps. Darrell Issa (R-Calif.) and Maxine Waters (D-Calif.), sought the audit to ensure that Fannie Mae wasn’t funneling taxpayer aid to the bank.

Fannie Mae, based in Washington, and smaller rival Freddie Mac of McLean have been operating under U.S. conservatorship since they were seized by regulators amid soaring losses in September 2008.
The audit found that Fannie Mae paid lenders more than required in most transactions because it wanted to negotiate a smooth transfer. Holders of the servicing rights could have tried to sell them elsewhere if Fannie Mae offered the minimum price.

In the Bank of America transaction, Fannie Mae sought to buy servicing rights on a portfolio of loans with a delinquency rate of 11 percent and an unpaid principal balance of $73.6 billion. Fannie Mae estimated that it would lose $10.9 billion on the portfolio if the bank continued to service those loans and would cut that loss by $1.7 billion to $2.7 billion if the portfolio were handled by a specialty servicer.

The inspector general criticized Fannie Mae’s method of computing the value of the loans and suggested that the FHFA should step up its scrutiny of the servicing transfer program.

Jon Greenlee, FHFA’s deputy director of enterprise regulation, said the program was intended to help borrowers stay in their homes, not just to save money.

“The reason servicing transfer transactions such as the one at issue are expected to save money is that the new servicer is better equipped to work with troubled borrowers,” Greenlee wrote in a response included in the audit report.

The FHFA inspector general released a second audit Tuesday concluding that the agency should strengthen efforts to ensure that Fannie Mae and Freddie Mac are better prepared for the failure of the banks that sell and service loans. The enterprises have lost $6.1 billion from failures of four such lenders since 2008.
— Bloomberg News