I must say that I agree with the comment above. First of all, comparing a Libor 150 to a CMT 150 is like comparing a Ferrari to a Fiat. The Libor 150 is way more equivalent to a CMT 200 than a CMT 150 which pays the customer more and the broker more than the Libor the way rates are at this time.

To answer your question in the first line of your post, they pulled back pricing because the yield is too low and is forcasted to remain low for the near future. In order to sustain pricing, they need to raise the yield (AKA margin).

Moving on, it’s not necessarily what we want to originate, it’s what is being funded by our banks that leaves us with a small choice. LIBOR was supposed to be the “wall street friendly” product since investors borrow at LIBOR and can calculate/forcast their spread and margin easier. That’s changed in the last few months and the remaining banks funding LIBOR products will need to follow suit with the investors need and change back to CMT: otherwise they’ll get stuck with a portfolio of loans that no one will buy.

***Since the difference is nominal between the two products, it shouldn’t matter what is sold. We need to remain profitable as a company in order to continue providing this program and our services to the seniors. Whatever the investor wants and is willing to pay the most for, is what they’ll get.

Which product should you offer? You should offer the one that is best for your senior client. You can’t claim ignorance if you didn’t take the time to compare amortization tables and study what spot rates are all about. Comparing programs and scenarios is the only way to serve your client fairly. It may have been all right for loan officers in the forward world to offer different interest rates, different fees, to various borrowers. It’s about front end money, back end money, etc., But we’re dealing here with seniors who deserve our very best, and if you want referrals, it’s best never to have to remember which program you offered which client. Remember, people talk. And for me, I want the “talk” about me to be good!