September 21, 2011
I don’t understand why mortgage brokers, like me, are so misunderstood. I am always getting feedback that borrowers stay away from us because they believe our fees are higher than going through their bank or online. Perhaps it’s all those mortgage television commercials, telemarketers or the banking giants that are giving us a bad image, but it’s time to set the record straight. There is ZERO cost for you to use our services and we offer the BEST service.
Zero cost, you ask? That is a true statement as it’s the law. The new, amended “Truth in Lending Act “(Regulation Z which relates to loan originator fees) went into effect on April 1. The regulation was created to remove the ability for a lender to increase or set high-priced compensation for services. To accomplish this, consistent compensation is paid by our lending institution (typically a bank) for loans for all sizes.
In other words, regardless of your loan amount, our compensation comes from our lending source, and is based on a set percentage. You don’t pay us any money for putting together your loan and if you do pay an origination fee, that fee is used to reduce your interest rate only.
At the heart of this amendment, I believe, was the common practice among banks and some unscrupulous brokers to “steer” borrowers into loan programs or high interest rates in order to increase their compensation. Consumers were often steered into loan programs that were not in their best financial interest. Moreover, banks didn’t and still don’t have to disclose fee-related information where brokers are required to disclose everything as it should be.
As mortgage brokers, we’ve long been under stricter scrutiny while banks don’t have to adhere to the same disclosures as us. This new rule makes the playing field more even, and it’s about time. We go the extra distance for you – even help with your credit score and help you prepare to purchase again after a Short Sale, foreclosure or bankruptcy. We do so much more at absolutely no cost to you.
How does that sound?