Home Buyer Beware – Part 8

  Ok we have covered several things to watch out for in terms of your mortgage structure.  Which are rate, term, Common Sense and what does my loan actually cost.  Well here is the difficult stuff to consider when looking for a home mortgage.  Currently there is a bill currently in Congress that will limit the max Broker compensation to 3%.  Well that does not sound so bad on the surface so let’s look at this a bit deeper. 

  First thing is this, in my opinion any Loan Officer – bank or broker, that charges 3% for a home mortgage needs to be ran out of the business.  Now what does that mean, The current bill in Congress states that the total compensation can not exceed 3%.  The key words here are “Total Compensation.”  Total compensation means the broker fee and all other third party fees such as;

  • Escrow Fees  
  • Processing Fees
  • Sub Escrow Fees
  • Title Fees
  • Recording Fees
  • Notary Fees
  • Endorsements Fees
  • Currier Fees
  • Wire Fees    
  • Lender Fees
  • Tax Fees
  • Flood Cert Fees
  • And any other third party fee that I left out    


So if you are looking to obtain a new mortgage in the amount of 150,000 the max fees can only be $4,500.  The above fees are a minimum of $3,375 or 2.25% of the loan amount.  So this only leaves .75% at best to pay the broker.  So that is only $1,125 for what can be as little as 3 weeks work or as much a years work to close your loan.  Would you work for this amount of money?  Well neither will your Broker.  So who loses, that’s right you the borrower / consumer.  Who wins?  Right again the Banks! 

   Just because Congress wants to limit the Broker compensation does not mean the money stops coming in.  It just no longer makes it to the Loan Officer.  Yes the Loan Officer’s in the past have done some shady things but as a whole they are people just like you and I that have families too.  It is my guess that only the top management at the banks that will see the benefit on this money pouring into the banks and somehow the Media will praise these people for fixing the financial system.  Worst of all the consumer things Congress is going a great thing limiting Broker’s compensation but in reality they are eliminating the only composition to the banks for getting a mortgage.  So with little to no competition means what to you the consumer.  Right again, prices will only go up.  Again our common sense is letting us down and we will not see the trees until they are gone. 

Stay Tuned….


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