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Old phone system equals new mortgages!

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If you are old enough, you will remember a time of no cell phone or oh my, no Twitter! In 1996, Congress passed the Telecommunications Act that cleared the way for multiple phone companies and the lowering of prices for all. It led to cheaper home phones and subsequently cheap cell phone prices.

Now, let’s zoom to March 31, 2011 and you need a mortgage (heck of a transition , huh!?).

You have an open market choice of going to a mortgage broker, banker, credit union of bank. All of them compete hard for your loan, fighting to give you the best deal. Now, April Fools is the next day.

Here’s the joke.

The banks on April 1 can do whatever they want to give you the best deal. Everyone else MUST, according to the Federal Reserve, charge you a fixed price for each loan, no negotiation, no ability to discount, zero, nothing.

So, if my mortgage brokerage decides that it will make a gross margin of 1.5% over the wholesale price I can offer and a person calls me for a mortgage of $1,000,000, I must charge them $15,000 payable by the bank in a Service Release Premium/Yield Spred Premium (yes, they really are the same thing) or charge the borrower $15,000 as a broker/origination fee.

Under current rules, I would never charge someone that much for a loan.

But, if that person goes to the bank, the bank can do what they want. And guess what? The major banks with a wink and a nod can set what “the rate” will be because competition has been eliminated.

It’s pre-1984 ATT all over again. It may be 4 major banks but they are acting as one.

No other industry in America has a limit on what they can make. Can you imagine owning a hardware store and only being allowed to charge $1.00 gross margin on every screwdriver but Lowes and Home Depot undercut you and you can’t match it? Yes, right.

How an this be stopped? Well, from discussions I have had with attorneys, legislators, industry professionals, the answer is that the Feds have overstepped their bounds of limiting an industry’s income.

Contact your federal legislator and tell them what the Fed is doing.

Otherwise, turn in your cell phone and shut down your Twitter account and plug in your home phone.

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20 Comments

20 Comments

  1. Lani Rosales

    December 17, 2010 at 11:51 am

    Great comment from facebook.com/agentgenius regarding this article:

    “This is more despicable behavior (and probably illegal favoritism) by the banks designed to eliminate competition. None of us likes competition, but it’s a healthy component of a healthy and vibrant economy! America is sick, and we need to get this patient healthy again!” -Art Vuilleumier

  2. Agent for Movoto

    December 17, 2010 at 12:48 pm

    yeah, like the banks really need to be coddled. ugh.

  3. Lani Rosales

    December 18, 2010 at 11:15 pm

    Fred, this is really astounding, what is their reason for imposing this??

  4. Fred Glick

    December 18, 2010 at 11:59 pm

    Because they said so. We have no other answer. Speculation? The Fed is helping the banks to manipulate the mortgage industry to kill their competition so that they will have enough money to pay the Fed back all the money they owe, keep the banks stabler because of higher income and just need to prop up the banking system in general.

    If you’d like to play journalist, I can give you people to call at the Fed and others who favor and oppose this.

    • Lani Rosales

      December 19, 2010 at 1:20 am

      I’m SO not doubting you, I just can’t understand why they would do this. I mean, I get the mechanics of it, but it’s so ridiculously short sighted, how could anyone who has more than a third grade education think this is a means of stabilization?

  5. Nadina Cole-Potter

    December 20, 2010 at 12:06 am

    We have the best legislators money can buy. And look for more of the same in the next Congress. No wonder elections are so viciously thought. Think of the spoils and privileges that come after even one term in Congress. Ugh!

  6. Nadina Cole-Potter

    December 20, 2010 at 12:07 am

    Freudian slip! I meant “viciously fought …”

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Economic News

Boomers retirement may be the true reason behind the labor shortage

(ECONOMY) Millennials and Gen Z were quick to be blamed for the labor shortage, citing lazy work ethic- the cause could actually be Boomers retirement.

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Older man pictured in cafe with laptop nearby representing boomers retirement discrimination.

In July, we reported on the Great Resignation. With record numbers of resignations, there’s a huge labor shortage in the United States. Although there were many speculations about the reasons why, from “lazy” millennials to the number of deaths from Covid. Just recently, CNN reported that in November another 3.6 million Americans left the labor force. It’s been suggested that the younger generations don’t want to work but retiring Boomers might be the bigger culprit.

Why Boomers are leaving the labor force

CNN Business reports that 90% of the Americans who left the workplace were over 55 years old. It’s now being suggested that many of the people who have left the labor force since the beginning of the pandemic were older Americans, not Millennials or Gen Z, as we originally thought. Here are the reasons why:

  • Boomers are more concerned about catching COVID-19 than their younger counterparts, so they aren’t returning to work. Boomers are less willing to risk their health.
  • The robust real estate market has benefitted Boomers, who have more equity in their homes. Boomers have more options on the table than just returning to work.
  • Employers aren’t creating or posting jobs that lure people out of retirement or those near retirement age.

As Boomers retire, how does this impact the overall labor economy?

According to CNN Business, there are signs that the labor shortage is abating. Employers are starting to see record number of applicants to most posted jobs. FedEx, for example, just got 111,000 applications in one week, the highest it has ever recorded. The U.S. Bureau of Labor Statistics projects that the pandemic-induced increase in retirement is only temporary. People who retired due to the risk of the pandemic will return to work as new strategies emerge to reduce the risk to their health. With new varients popping up, we will have to keep an eye on how the trend ultimately plays out.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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