(1) Mortgage Broker Transactions with Indirect Compensation from the Lender
Through Flat Fee or Other Computation
The FRB rules provide substantive restrictions on mortgage loan originator compensation
as stated above. Loan originators should both ensure that they are compliant with the
FRB rules and look to RESPA in order to accurately disclose these charges on the GFE.
RESPA rules and instructions anticipate various compensation models for mortgage
brokers and mortgage lenders. Specifically, RESPA instructions for completing Block 2
state, “[f]or a mortgage broker, the credit or charge for the specific interest rate chosen is
the net payment to the mortgage broker from the lender (i.e. the sum of all payments to
the mortgage broker from the lender, including payments based on the loan amount, a
flat rate, or any other computation, and in a table funded transaction, the loan amount
less the price paid for the loan by the lender).”6 (Emphasis added.)
Example (1): Flat fee compensation.
In the example provided, the mortgage broker compensation is a flat fee of $4,000 (to be
paid by the lender). The lender charges $500 for processing and administrative fees.
Thus, Block 1 reflects a charge of $4,500.
In this example, Block 2 has a credit of $4,000, resulting in an adjusted origination
charge of $500 in Block A.
See Example 1 in the March 2011 RESPA Roundup here: http://www.hud.gov/offices/hsg/rmra/res/mlocomplrodup31811v2.pdf