It is good for everyone to know that there is a new Federal rule in town when it comes to a mortgage broker dealing with your loan. The New York Times recently reported that as of April 1, 2011 the Loan Originator Compensation amendment to Regulation Z is in affect.

Yes I know the amendment sounds like a mouthful.  It was created so that clients who are getting a loan get the best deal they can on the interest rate and other fees. This specific rule enforces the loan originator or any broker to look into the best interest of their client and not what is in the best interest of that broker’s wallet.

As you all can assume, the higher the interest rate and fees a client pays, the bigger  a cut goes to the broker and brokerage.

In the new system the brokerage can negotiate a fixed commission from a lender no matter what the size of the loan is. A standard for this will be 1.5 % to 2.5%. Also if there is a set commission set, the brokerage must pay the actual broker a salary or an hourly wage and must not give them a part of the commission.

Based on the loan amount a broker is also not allowed to charge a client any fees or percentage during processing. Although, the consumer will have to pay the broker for any outside services required for the process.

If there are any more questions or concerns regarding mortgages or changes to the law and you would like to speak to a professional, CondoDomain would be happy to help. Click here.