Mortgage Broker Questions

[Jamci]

I originally worked for a well known lender, however I have recently went to work for a broker and am finding things are a little different concerning regulations. My question is....can a broker charge orignation and discount points? Currently we only charge a "Mortgage Broker Fee" and I'm under the impression that we cannot?

[Erik]

Yes, you can. Depending on the state there are limits on how much can be charged but as far as I know it's never "illegal" to charge origination/discount.

[Cameron Moss]

Ive been a broker for 7 years in INdiana, Ohio and Missouri - no problem as a broker to charge origination and/or discount points - some lenders won't let you charge both - and or course there are federal and state caps on max earnings from all sources (origination, processing, YSP, etc)

TIP - many many lenders do NOT calculate those caps properly or consistently - be sure to know what you state limits are and work within them - but do NOT give in right away if lender says you are over the limit and you KNOW you aren't - they miscalculate it all the time

[Secret!]

Best to get legal advise like this, from the Legal Department of your employer

[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.