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#1887732 - 01/16/14 09:03 PM Bona fide discount points - again
nelender1 Offline
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Joined: Nov 2013
Posts: 19
Currently our pricing structure, which is built on Fannie Mae pricing, only gives about .125% rate reduction for a 1% discount fee. Could this be considered a bfdp because it reflects established industry practices, even though it produces less than a .250% reduction in rate?

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#1887825 - 01/16/14 11:37 PM Re: Bona fide discount points - again nelender1
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Discount points are not usually one for one. They are meant to offset the higher rate over the projected life of the loan. The life of a typical mortgage loan is 7-8 years, so 8 years at .125 = 1%.
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#1887854 - 01/17/14 11:58 AM Re: Bona fide discount points - again nelender1
OldSchoolBanker Offline
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Joined: May 2005
Posts: 662
FL
I am not a Guru, but agree with RLCarey. We too sell direct to FNMA and we are permiting 1 bfdp for .125% rate reduction on fixed rates. We portfolio ARM's and 1 bfdp gets 0.25%.
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#1888580 - 01/21/14 05:12 PM Re: Bona fide discount points - again nelender1
nelender1 Offline
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Joined: Nov 2013
Posts: 19
Thanks for your replies.

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