Banks are the wolf in sheep’s clothing.  They may look safe and convenient but you have no idea what they do behind your back.  They have one goal and one goal only.  They are going to take your money and if anyone or anything stands in their way, they systematically eradicate them or it.

This is not overly dramatic.

Example #1:

In 1999, the brokers carved out a sizeable chunk of the bank’s business.  At one point, the brokers were originating 75% of the loans to the bank’s 25%.  Well the banks were not going to stand for this so they went to Capitol Hill.

With all their money (the broker’s organizations have none), they changed the law so only brokers have to disclose the money they make from increasing your rate.

Yield spread premium has to be disclosed by brokers but the bank’s service release premium does not.  The banks thought if borrowers saw this massive dollar amount on the closing statement when they used a broker, they would run back to the banks.

Well, they underestimated the resourcefulness of the brokers.  Most people still to this day have no idea their rate was increased just to put money in the broker’s pocket even though it is on the closing statement.

Back to the drawing board for the banks.
Example #2:

In California, the phrase “no cost” was outlawed because it is hugely misleading.  Well the big boys like Countrywide, Washington Mutual, and others use this all the time and other misleading statements.

To get around this, they switched all their mortgage divisions into banking divisions.  Mortgage companies have to abide by certain state rules.  Banks don’t like those rules so by putting their mortgage operation under the umbrella of their banking division, they are now under FDIC rules and not mortgage rules.   Now they can do whatever they want when it comes to mortgages.  There are no state specific mortgage rules so they get a blanket pass to screw people.

Example #3:

Big banks are always one of the top contributors to both political parties.  They throw tons of money to each side to make sure they get their way.

Interestingly, all you hear is, “the brokers caused the foreclosures”.  All the politicians jumped on the bandwagon and blamed only the brokers for the foreclosures.

Are you kidding?  If you actually looked at the numbers you would find the foreclosures are being caused by builders selling overpriced houses using their own mortgage company and banks pushing the option ARMs and other high risk loans.

Yes the brokers sold those too.  But the banks sold so many more.

If you get all the mouthpieces to bash brokers, where do borrowers go?  They go back to the bank….the wolf.

By the way, the bank’s rates are much higher.  The only reason they do all this and throw so much money toward it is to protect their profit.  And a huge profit for them is the increase in the rate.

A bank employee has no idea what the bank is making off your rate.  They are given a rate sheet that has already been artificially bumped up to build in profit for the bank.

A bank employee does not have access to wholesale rate data.

There are many different versions of banks too.  There are the banks that have your checking accounts like Wells Fargo.  There are banks like Countrywide that only do mortgages.  And then there are banks that became a bank for one reason and one reason only.

To hide their yield spread premium from you.  After 1999, many big brokers became banks to be able to hide the money made from increasing your rate.  Those guys are sneaky because they still talk the talk and walk the walk of a broker.
Do not ever use a bank.  You will always pay a higher rate.  That is just their business model and there is no way around it.