Commitment by Amerisave
In a unique arrangement with the mortgage professor, Amerisave agreed to disclose its wholesale prices and markups to customers who access it through the professor's site. The wholesale price is the lowest price Amerisave finds among the many wholesale lenders with whom it does business. The markup as a percent of the loan is shown at the top of the screen.
Amerisave also agreed that its markups would be based solely on loan amounts -- not with the borrower's credit, down payment, type or location of property, or anything else. This means that there can be no tricks. The borrower who is a smart lion and the borrower who is a naive lamb will pay the same markup if they borrow the same amount. Of course, their wholesale prices could be different if they have different credit scores or for any number of other reasons.
The Mortgage Professor's Guarantee
The professor guarantees that, unless your loan amount changes, the markup on the loan you price will be the markup you will pay Amerisave at closing. If the markup you are promised is not the one you receive, provided you haven't changed the loan amount, the mortgage professor will make it good. This commitment only applies, however, to borrowers who access Amerisave through the professor's web site. Amerisave pays the mortgage professor to assume this monitoring function, and to provide guarantees to borrowers.
Not all borrowers will qualify for the loans that they price on Amerisave. Some will have to be funded by wholesalers who specialize in sub-prime loans. Amerisave does not yet have the capacity to allow customers to price sub-prime loans on-line; this must be done by an Amerisave loan counselor. However, Amerisave has committed to the same markup structure on sub-prime loans as on other loans, even though sub-prime loans cost much more to originate. The mortgage professor will not receive any payment for his monitoring activities in connection with sub-prime loans.
Third Party Charges
The cost to you for property appraisal and for obtaining your credit information, as shown on Amerisave's site and on the Good Faith Estimate you will receive when you apply, are also guaranteed by Amerisave and the professor. Other third party fees, of which the most important are title insurance and other title-related charges, cannot be guaranteed at this time. The figures shown on the screen are estimates, and they can be a little different at closing. However, under no circumstances will Amerisave add a markup to any third party charges. Planning is underway to bring all third party charges under Amerisave's guarantee.
Amerisave's Wholesale Prices
As noted earlier, the wholesale mortgage market is extremely competitive, which means that wholesale price spreads are generally quite narrow. Nonetheless, price differences do arise, especially in less-common market niches, and some wholesalers offer better prices to the loan providers who send them more business.
The mortgage professor cannot guarantee that all the wholesale prices posted by Amerisave on a given day are absolutely the lowest available from any wholesaler on that day. However, the professor intends to monitor Amerisave's wholesale prices relative to those available from industry sources, and flag any significant differences. It is in Amerisave's interest to find the best wholesale prices available.
Copyright Jack Guttentag 2008