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Apples mainly to convertible securities. Difference between how much common stock one party must sell and the other wishes to buy for the same amount of convertible in a swap.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


Additional rent for retail stores,based on a percentage of gross sales.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.


The difference between the price posted to its loan officers by a lender or mortgage broker and the price charged the borrower.

Loan officers who work for lenders or mortgage brokers receive updated prices from their head office every morning. These consist of rates and points for different loan programs. They are the “posted prices.”

The loan officer who executes a deal at the posted price gets paid a commission that may be .5%-.7% of the loan amount. On a $100,000 loan, the commission might be $500-$700. But if the loan officer can induce the borrower to pay more than the posted price, the commission rises. It now includes an overage.

For example, the posted price on a particular loan is 5% and zero points but the loan officer induces the borrower to pay 5% and one point. That point is the overage. It is worth $1,000 on a $100,000 loan, and typically the loan officer gets half. An overage can thus double the loan officer's commission.

Overages are heavily concentrated on high-rate loans with negative points, or “rebates.” For example, the lender posting a price of 5% and zero points might also quote 5.25% and -2 points. Loan officers push higher-rate plus rebate combinations because they can collect an overage without taking any cash out of borrowers' pockets. If the loan officer in the example above quotes 5.25% and -1 point to the borrower, the other point of rebate becomes the overage. The borrower pays for the overage in the interest rate for the next five or 10 years, but that's down the road.

Overages associated primarily with rebate loans are an equal opportunity abuse, practiced by lenders and mortgage brokers alike. The only difference is that mortgage brokers who retain rebates from lenders leave a trail in the Good Faith Estimate of disclosure, where it can be discovered by the borrower, although usually too late to do anything about it. Rebates retained as overages by loan officer employees of lenders disappear without a trace.

Defenders of overages argue that they merely reflect the wheeling and dealing characteristic of many markets. They point out that sometimes borrowers turn the tables, forcing loan officers to cut the price below the posted price, which results in an “underage.” The automobile market works essentially the same way.

The weakness of this argument is that almost everyone who buys an automobile understands that wheeling and dealing is part of the game, but many mortgage borrowers don't. They are innocents. That's why the number of underages is miniscule compared with the number of overages.

To avoid overages, borrowers must either confront the loan officer or switch to a distribution channel where there are no overages. Confrontation means letting the loan officer know that you know that mortgage prices are not engraved in cement and that you have or will explore other options. If you find this disagreeable, either retain an Upfront Mortgage Broker (UMB) to act as your agent in shopping for a loan or deal with an online lender, such as ELOAN.com or Mortgage.ETrade.com, which do not allow employees to deviate from posted prices.

Also see Loan Officer and Mortgage Scams and Tricks/Scams by Loan Providers/Pocket the Borrower's Rebate.

The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Over the years I must have written 10 or more articles on one or another aspect of avoiding overages.
Overage - also called claw back - is a sum of money over and above the original sale price that a seller of land may be entitled to receive following a completion of the sale, if a certain event takes place.
Some argue that allowing professors to accumulate overages saves money by avoiding the need to hire additional workers.
* Do you split the overage income with your originators, encouraging them to collect overages where they can, knowing that they are hidden from consumers?
What we found is that, for approximately the same severity and case mix, LOS overage increased dramatically with just small rises in daily admissions.
In this case, Nowlin explained to troopers that he had sold an overage of rockfish to one of Dulcich's subsidiary companies, Pacific Surimi, despite not having caught 10,000 pounds of whiting.
Shoop imparted that inventory days at contract manufacturers rose about 15% year-over-year, about one-third as a result of improved demand and the rest classifiable as "excess." DB pegged the value of the overages at some $3 billion.
The co-beadlets significantly reduce overages and improve manufacturing efficiency.
Constructed from rigid, puncture-resistant plastic, Sharpsmart containers offer a broad selection of features: a fill-level gauge; a clear-view window that indicates the fill level to monitor the container's contents; an overfill protection mechanism to avoid overages; access geometry that allows the container to accept a wide range of sharps while minimizing hand access; and a final closure activation that keeps the container tamperproof.
The allocation method always attempts to pick exactly the amount requested from the largest measure quantity available to minimize overages when picking.
A balance of $22,305 will cover estimated cost overages and equipment repairs.
The report also stated that the lack of controls led to inventory deficiencies and overages, with none of the agencies overseeing the stockpiles conducting periodic inventories to compare the stock with guidelines for required quantities.