Broker Fee Rule Snags Some Lenders

Any lenders (not just mortgage brokers) who receive a fee from another lender in the origination process will have to disclose their total compensation on the new standardized good-faith estimate developed by HUD as part of its Real Estate Settlement Procedures Act proposal. An "exclusive agent of the lender who is not an employee of the lender, but who renders origination services in a table funded or intermediary transaction, would be subject to the mortgage broker disclosure requirement set forth in the proposed rule," according to a copy of the RESPA proposal obtained by MortgageWire. The Department of Housing and Urban Development is expected to publish the proposed rule soon. The narrative in the proposal describes how HUD continued to consumer-test and make changes to the four-page GFE so that consumers can identify the lowest-cost loan without being confused by yield-spread premiums, which are called ''an adjusted origination charge" on the front page. "HUD is now convinced that by making these changes, any disadvantage to brokers is virtually eliminated," the agency said. The RESPA proposal allows lenders to use "average cost pricing and discounts" in listing the cost of third-party settlement services on the GFE, subject to a 10% tolerance.