From: "Jeff Strickland" 
Newsgroups: alt.invest.real-estate alt.org.natl-assn-mortgage-brokers alt.real-estate-agents
Subject: Re: Income verification for mortgage
Date: Wed, 8 Oct 2003 14:00:09 -0700
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"Baird Spalding"  wrote in message
news:uJYgb.28927$9a7.14250@bignews6.bellsouth.net...
>
> On  8-Oct-2003, "Jeff Strickland"  wrote:
>
> > The bank might service the loan itself, and they
> > are making buckets full of interest that can easily pay the setup fees
and
> > closing costs, and the consumer doesn ot bear these costs directly. They
> > might take a higher rate, by maybe .125, or something or maybe not. They
> > are
> > the cream of the loan consumers though, and the bank wants these
> > customers.
> >
> > There is a wholesale market where the borrowers that want a higher LTV,
or
> > have a lower Credit Score, can go for a mortgage. The qualification
> > guidelines are easier, but the broker that sells these loans does not
> > participate in the servicing, so they have to collect the loan fees from
> > the
> > borrower.
>
> Why don't they handle everything if possible? It sounds that in practice
the
> banks are making less for the cream, and giving a discount so the brokers
> can bring them the less than perfect borrowers. Why would a bank in
essence
> pay more for a less desirable loan? Was it at one time used to keep
Negroes
> and assorted trash from walking into the bank? Is it to maintain clean
> hands? Do they count on the fact that a percentage of brokers will package
> the B paper as A paper or commit mortgage fraud, then the bank can slide
it
> past their investors, maintain a high rating, and blame someone else if
> someone gets caught?

I don't know why they don't service the loans themselves. All I can say is
that many lenders do not service the loans they set up.