From: vze2k6pb@verizon.net (v)
Newsgroups: misc.consumers.house
Subject: Re: How do mortgage brokers make their money?
Date: Thu, 08 Jan 2004 17:00:46 GMT

On Thu, 08 Jan 2004 04:41:12 GMT, someone wrote:

>The bank says that the broker is trying to get a rate slightly lower
>then the one they are offering me and then basically skim off the top.
>The brokers I've talked to say they only make their money by getting
>paid a "finders fee" from the lenders.
>
>I suspect both are true in different situations.  How can I find out
>what things are happening when I check out a broker?  I'm trying to
>decide whether or not to go direct to a bank or use a broker.
>
What's it to you how they get paid, would you pay a bank a higher rate
because you don't like the broker's commission on a lower one?  Why
would this matter to you if the rate and points are better from the
broker, and you are satisfied with the service?

Its both the same thing in the end.  (If your bank is suggesting that
the broker "skims" by getting your check for (say) $2,000 and then
turns around and makes an actual pmt onn the loan of $1,950 then you
bank is full of shit as far as I am concerned.  Never happens, why
would the broker take the chance that you'd miss a pmt of the $2,000
and he is stuck with the $1,950 on *your* house.)

Ask the guy at the bank how *he* gets paid, lots of loan officers get
incentives for closing loans, and some banks use "representatives"
that get commissions just like brokers do, they just work for only the
one bank.

Is there something wrong with "skimming"?  What makes it the bad thing
of "skimming" rather than the good thing of commissions, resale, pure
profit?  What is it?  Have the bank explain how this is different from
THEM originating a loan and then selling it for profit on the
secondary market because there is a rate spread. Have a bank who holds
their own loans explain how they are not "skimming" when they obtain
funds from depositors at 2% interest paid, and then lend them out to
you for 6% interest charged.

Do you think the bank doesn't make a profit?  Most bank loans, the
bank turns around and sells them immediately anyway.  Would you not
take the best loan because you found out the broker got paid?  What a
shock!  Brokers getting paid.

Please explain to me the difference between a type of compensation you
approve of, and a type you disapprove.  The entire lending industry is
built on rate spreads.  What's the problem?

-v.