[Greg]

This is one of the arguments of RESPA reform. Charging discount points is supposed to be for a customer benefit i.e. lender credit or interest rate buy down.

Take Peter's advise on this one.

I never charge discount points unless a customer is buying down their interest rate. The amount of discount points is equal to the actual cost the lender is charging. So, I do not charge a 1% discount that costs me .50% in which I would pocket .50%. In this scenario the discount points would equal .50%.

This is the way it should be handled unless you are a Bank. Or if your are a Correspondent of a Bank. Then they usually will allow you to pocket the discount. You are warehousing loans or holding them. I just choose not to do it all around.