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Discussions tagged with 'Broker vs Lender?'
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On a mortgage loan transaction, the commission for the mortgage broker and/or mortgage lender is referred to so yield spread premium (YSP)
THE HIGHER THE COMMISSION the mortgage institutions charge the higher the rate the borrowers pay. Both non-bank mortgage companies, mortgage brokers and mortgage lenders need to be licensed in each state they originate loans. Losn officers that work for Credit Unions and banks are exempt from taking and passing the NMLS exam and getting licensed. They just need to be registered
Mortgage Brokers need to disclose the yield spread premium on the mortgage loan disclosures disclosed to the borrowers
The maximum commission the mortgage broker can charge is 2.75% for the loan amount and most loan officers make 1.35% of the loan amount of the 2.75% Mortgage Lenders DO NOT NEED TO DISCLOSE THEIR COMPENSATION on the Loan Estimate and Closing DISCLOSURE and there is no maximum compensation on each
Mortgage Lenders offer charge higher than the 2.75% of the loan amount because of high overhead Most Lenders typically make 5% to 9% on each loan and are exempt from disclosure and keep the zUsp hidden
Basically this type of compensation are Lender Paid compensation because the compensation is already built in to the rate. The higher the compensation the higher the rate. Mortgage brokers can charge lower than 2.75% and give their borrowers par rate (which the Mortgage Brokerage does not make a yield spread via lender paid compensation. Borrowers get par rate and they pay the compensation outside via borrowers paid
The borrowers get wholesale pricing on the loan
The loan officer can charge lower than the maximum 2.75% allowed by law.
https://gustancho.com/lender-versus-borrower-paid/
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replied 7 months, 2 weeks ago
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