The Mortgage Broker can earn an origination fee, loan processing fees and mortgage funding lender rebates. Lender rebates are “Compensation not paid from loan proceeds” and related to an excessive interest rate above the benchmark interest rate. Borrowers with mortgage information will cause lender competition for the borrower’s loan business. Lower interest rate will cause a lower lender monthly payment.

The consumer’s fear of confrontation is an ally of the marketing industry. The old refrain, “I have the best prices available in the market place”, is an attempt to discourage any search for a better product. The same holds true for mortgage loan originators.

The mortgage originator will provide certain information short of actual details. The Good Faith Estimate (GFE) required by HUD has its limitations. At time of mortgage loan application, the “Real Estate Settlement Procedures Act of 1974” (RESPA) requires both supervised mortgage lenders and third party mortgage loan originator (Mortgage Brokers) to disclose all estimated cost that are expected to be charged the borrower at loan closing. Be prepared to cancel the loan application in a “Bate & Switch” situation.

Mortgage Brokers have an additional RESPA disclosure responsibility when it comes to “Lender Rebates”. The key to establishing real mortgage loan competition for your mortgage loan business is product information. What are rebates? How do you obtain the current benchmark interest rate? What are “No Ratio” loan application parameters? Loan information is king when one lender is forced to compete for the borrower’s mortgage business. Local mortgage lending industry competition is necessary, if the consumer is to extract the best available mortgage loan program and lowest interest rate.

The burden of savings thousands of dollars is squarely on the mortgage borrower’s shoulders. There are no friendships in business when it comes to money. When refinancing a home mortgage, maintain an arms length distance between you and the friendly lender. Be skeptical of the information provided by the mortgage lender and tenacious in your questioning of all fees, cost and rebates charged by the originator.

The lowest lender cost possible at loan closing can provide the borrower with the best available loan program. Comparing lender loan programs, interest rates and cost will save the borrower money. There is no substitution for creating lender competition for the borrower’s mortgage business.

“Caveat Emptor – Let The Buyer Beware”

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