I have a very long question. I hope this all makes sense. We are starting do 100% Home Financing with an affiliate finance company. We have closed 3 of these loans so far, and I am not very comfortable with the way they were closed.

This will be an 80/20 deal. The affiliate finance company charges a $1250.00 committment fee, we disclose this fee on the 80%GFE we are also preparing the 20% early documents and closing doucments and assigning the mortgage to the affiliate after closing. We are closing the 20% loan in our name, are we O.K. in using their interest rate and term? We are also charging a $200 bank fee for the 20% loan. Can we do this since we are not acutally keeping the loan and immediately selling the loan. We have also disclosed the affiliates terms and rate. Is this all too confusing?

I see nothing wrong with this as long as you disclose all fees and charges properly.

As for closing at “their” rate versus “your” rate, wouldn’t “their” rate be “your” rate for this type loan. As long as all similar loans are priced the same way, I don’t think there is a problem here.

The $200 “bank fee”, which I’m not sure how you are classifying the fee, is no problem either as long as it is reasonable for the work you are doing, and included in the APR calculation if required.

For example we only offer Ajdustable Rates for our 2nd mortgage they offer fixed rates. Would this still be O.K

We do not have a 2nd mortgage fixed rate product.

Yes, if I understand you correctly. The 80/20 plan is only done through the affilate, therefore all 80/20 plans will be priced the same, therefore that pricing becomes your pricing on this product.

Any opposing or supporting opinions out there?

I see a problem showing the $1250 commitment fee to the affiliate for the second as a fee on the first. It would seem that the reason for doing this is to keep the second from being subject to HOEPA, but since the fee would not be charged if there was no second mortgage, that's where it should go.

That's possibly true, but keep in mind these are Purchase Money Transactions and HOEPA does not apply.

Let me re-state - I assumed since they are 80/20 deals they are PMT, howver if they are not then they do need to worry about HOEPA.