4 ms·

At the end of the day you are the one who pays for the fedex though.

• jacquesm 3y ago
  Not really, no. Mortgage payments are interest and principal, not administrative fees beyond what you paid when you signed the original contract.
  • sokoloff 3y ago
    Whatever costs are imposed broadly an industry are covered by customers of that industry. If mortgages are more costly to buy, they’ll be more costly to originate.
    • dmurray 3y ago
      The consumer doesn't bear 100% of the costs though. If mortgages cost $1mm to buy, they wouldn't cost $1mm to originate. They'd cost a little extra by being illiquid - the same amount as if they cost $2mm to buy.
      • rvba 3y ago
        The consumer nearly always bears 100% of the costs - because most companies sell at a profit. The final price is a combination of all costs incurred + a profit percentage imposed on the consumer. If all customers would receive fedex mail, then the costs of this fedex would be pushed on them somehow. Probably by making them pay slightly higher interest rates or by introducing some one off handling fee.
        • jacquesm 3y ago
          Profits aren't a fixed number.
          • sokoloff 3y ago
            Of course not, but financial products are priced and offered with a financial outcome (usually a margin) in mind. If you make mortgage processing more expensive, you'll find the offers for origination are worse than if mortgage processing were less expensive.
            • jacquesm 3y ago
              Sorry, it's a ridiculous argument. Mortgages get bought and sold all the time and clearly the buyers are on the hook for the communications costs and these do not pre-emptively get priced into future products by the sellers. I'm sure that there are situations where your argument has merit but this isn't one of those.
              • sokoloff 3y ago
                No one is saying that existing mortgages would be re-priced. Those are contracts and you can't unilaterally change them. What I and others are saying is that if you changed the obligations of buyers such that mortgages became more expensive to service, that those servicing cost increases would ultimately be borne by the mortgage borrowers rather than eaten by mortgage lenders out of the goodness of their hearts. > these [communications costs] do not pre-emptively get priced into future products by the sellers They 100% do get priced in. Whenever you buy a product, you're paying all the costs of that product. When someone originates a mortgage, they're aware of the secondary market for mortgages. If that secondary market is eroded by a significant increase in communications costs, that reduces the willingness of a secondary buyer to bid for your book of mortgages. That erosion reduces your projected profit on originating, so you take a little longer to lower your offered rate to 5.250%, or you charge a bit higher origination fee, or whatever to ensure you maintain a viable business. So long as these fees hit the entire market, the other originators are all making the same calculations. It seems odd that you [seem to] think that money for these costs would just result in reduced profits for the financial services companies rather than in increased borrowing costs.
                • jacquesm 3y ago