The Big Squeeze - Countrywide Limits Broker Compensation

Countrywide issued a communication to its brokers today limiting compensation on all loans to Countrywide to 4 points, including yield spread premium (back points or YSP).  While 4 points may seem egregious to some, it is the first step at banks actively restricting total compensation to brokers above and beyond traditional federal and state guidelines.  

The following is an Important Message regarding Broker Compensation. 

Dear Valued Business Partner: 

Consistent with evolving industry standards within the wholesale lending environment, Countrywide^®, America’s Wholesale Lender^® will be modifying the current Broker Compensation Policy for all broker-originated loan transactions. Effective Thursday, April 3, 2008 at 8:00 p.m. (PT), the maximum allowable total broker compensation will be set at 4% - which includes Yield Spread Premium (YSP) plus any additional points and fees charged by the broker to the borrower.* 

Broker compensation limits do not include discount points paid to the lender to reduce the borrower’s interest rate, lender fees, broker credits to the borrower or pass-through fees paid to a third party for actual services rendered. 

Impact to Pipeline 

Loans currently in the pipeline must be in “Docs Out” status, as reported on CWBC, by Thursday, April 3, 2008 at 8:00 p.m. (PT) or will be subject to the new Broker Compensation Policy. In addition, pipeline protected loans under the old Broker Compensation Policy must fund no later than Wednesday, April 30, 2008. 

If you have questions regarding this new policy, please contact your Countrywide Account Executive. 

Thank you for your business. 

As a wise man once said, the beat goes on…

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