Question about mortgage broker fees.

[^eagle^]

I am currently working with a broker who is purchasing a loan for me through countrywide.

on the mortgage broker business contract the broker left the brokerage fee blank. Further down he stated that the brokerage will recieve a sum for "the business" in a range of 0% to 4% of the purchase price. I am also being charged one point.

leaving the fee blank raised a big red flag to me. should I be concerned?

The brokerage fee on the good faith estimate is also blank.

 

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[imirza]

Additionally, the broker almost certainly is getting kickbacks from the lender that aren't on this GFE (you're not paying it).

Incorrect. All fees the broker gets from the lender are on the GFE. Its illegal not to disclose payments from the lender to the broker. Other then that everything else you wrote is correct. Brokers usually make their money via the yield spread premium YSP. The lender offers a wholesale rate of say 5.75% to the broker and retail is 6%. So the broker may charge you 5.875% and make the YSP 5.875 - 5.75 = 0.125% X the loan amount.

 

[HighEI]

Hello,

When the mortgage firm or brokerage is the one lending the money the YSP (Yeild spread premium) that the originator earns does not have to be disclosed however origination fees do.

When the mortgage firm or brokerage represents a third party bank not their own bank or money lent then yes they must disclose YSP and origination fees.

Hope this helps.

 

[^eagle^]

Thanks to all. I have a better understanding of it now.

 

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[dbaker89]

Hello,

When the mortgage firm or brokerage is the one lending the money the YSP (Yeild spread premium) that the originator earns does not have to be disclosed however origination fees do.

When the mortgage firm or brokerage represents a third party bank not their own bank or money lent then yes they must disclose YSP and origination fees.

Hope this helps.

I was going to disclose this as well.

The only fees that need to be publicly displayed are the origination & discount fees. The discount fee is generally something that is being used to pay down points in the event that the buyer or the seller has agreed to do something with that.

If you go in for a loan and you see a fee for origination and discount and your not buying points -- run.

 

[dbaker89]

When I bought my primary residence a couple months ago, the GFE listed no origination fee, but did list a discount fee of 1 point. I wasn't getting a discount, so I asked my broker about it. He said that sometimes the broker will put their commission on the discount fee line instead of the origination fee line, for some reason I didn't quite get.

In the end, it may ultimately end up working in my favor if the discount fee is tax deductible (not sure if the origination fee is or not).

Ultimately, I paid 1 point, regardless of which line it was on, and my total closing costs were less than 2%, so I was happy...

Yeah i'm sort of new to the business so I couldn't tell you if there were any tax-favored incentives to list it as a discount fee verses an origination fee.

1 point up front is pretty standard.

 

[dbaker89]

When I bought my primary residence a couple months ago, the GFE listed no origination fee, but did list a discount fee of 1 point. I wasn't getting a discount, so I asked my broker about it. He said that sometimes the broker will put their commission on the discount fee line instead of the origination fee line, for some reason I didn't quite get.

In the end, it may ultimately end up working in my favor if the discount fee is tax deductible (not sure if the origination fee is or not).

Ultimately, I paid 1 point, regardless of which line it was on, and my total closing costs were less than 2%, so I was happy...

You got a good deal.

 

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