Stephen Wheeler – Real Estate Broker

I have been a broker since 1999 and have closed real estate finance transactions in seventeen different counties in California.  My involvement and suggestion in 2001 towards reducing broker abuse of borrowers became the cornerstone piece of legislation finally enacted in 2010 requiring brokers to credit all rebates from lenders directly to borrowers and disclose their fees separately.

I have always endeavored to make every loan that I have closed as transparent to the borrower as possible. Transparency is often difficult at times due to the many third parties with whom we work, changes in market conditions, and towards the end of the process where the broker is not in the loop between the lender and the escrow/title company.  I make it a point to stay in that loop and to walk each borrower through the process so that they understand the difference between a non-recurring closing cost such as escrow and title fees as opposed to a prepaid expense, items the borrower would pay anyway such as interest, taxes and insurance that are charged through escrow.

Every loan I have closed has separately shown my fees charged and has always credited the yield spread premium (rebate) in full to the borrower, well before it was law.  This is referred to as a borrower paid transaction because the borrower agrees on the fee the broker is to charge and then the rebate (yield spread premium) is credited in full to the borrower in escrow to cover the broker fee and nonrecurring closing costs, depending on the amount of the rebate.  The lender paid transaction is what most brokers have opted to use which allows them to bury their fee in the lender rebate and you don’t really see it except as a side disclosure on the final HUD.  The reason you don’t want to choose a lender paid transaction is that the broker could have a fee of 1.5 points and make up for it by going with a higher rate loan to get the rebate needed to cover their fee and perhaps non-recurring closing costs.  This option affords no transparency to the borrower and doesn’t allow for an informed decision often leading to not getting the best rate out there.

My basic philosophy is to treat my clients as I would want to be treated in what is usually the largest financial transaction of their life.  Towards that end I make my best effort to communicate how the process works and what the options are from beginning to end.

I do not generally engage in purchase transactions unless we know each other well.  These transactions tend to be very time consuming and with the new federal laws that prevent us from using a To Be Determined (TBD) as a property address, pre-approval of loans is no longer possible.  This is a disservice to the buyer/borrower and should be changed.  In any event, I am just not willing to charge what I consider to be fair compensation in a purchase transaction because there are enough brokers out there hungry enough to do it for less money.