“In terms of authority, all of a sudden we’re concerned about lenders being subject to rate regulation authority, when title insurers aren’t subject to it?” Birnbaum continued. “I’m not looking to get into a debate with Rich at this point in time, but it seems to me that you could have an informed discussion about this. You can design a program that addresses this and get to the fundamental issue, which is consumers don’t have any market power to drive down price, but a lender, who is in the market repeatedly, does have that position. It’s a very valid point of inquiry to determine whether the lender, who does get a lower price, will pass that on to consumers. And if that is true, which market forces and market analysis suggest is true, then this is a program worthy of discussion and design, so you address some of the issues that Rich raises.” as reported by The Title Report.
I disagree - big time.
Mr. Birnbaum doesn't understand how the system works and that's ok because he's not immersed in it as I have been for over 30 years. Here's how it works - very simply - each party protect its own interest.
Setting up "lender pay" products of any kind empower big vendor management systems that offer revenue sharing to mortgage lenders. The motivation, if affiliations such as this remain legal, is to get the cheapest, fastest, most profitable product for the lender. That doesn't normally translate into cheapest, fastest, most profitable or beneficial product for the consumer.
Unless a fiduciary duty is enforced through new laws, regulations, or through court actions, lenders on the whole will continue to act in their own interest rather than consider that they have any duties to protect the interest of the consumer.
That said, consumers have enormous power. YOU control the transaction. YOU choose the Realtor. YOU tell them which lender you want to use. YOU tell everybody which title insurance provider you want to use.
YOU, THE CONSUMER, HAVE THE POWER AND YOU MUST USE IT or LOSE IT!
Think about it. You are just discovering the power that you really have in a real estate transaction and here are regulators and consumer advocates trying to come up with a way to take that power out of your hands. They don't understand that they are removing from your hands the very weapon with which you can best protect yourself.
Well, the good thing is that they intend to study the issue and I am certain that the facts will support a good conclusion. I trust that truth will prevail.