Four Questions To Ask Your Mortgage Broker

Anything we write about the ethics of mortgage brokers seems to touch a nerve, so here's more. From The Wall Street Journal, "Four Questions to Ask Your Mortgage Broker:
1) What will be your total compensation, from me and the lender, for any loan you help me obtain?
2) Will that compensation depend on what type of loan I choose, the interest rate, or any prepayment penalties?
3) Are you willing to work for a flat fee specified in advance and rebate to me any compensation beyond that level that you get from the lender?
4) How many lenders do you work with on a regular basis? Do any of them account for a majority of your business?

Additional points from the Journal story: "(This) doesn't mean consumers should shun all brokers. Many provide good service and can help people sort through the complexities of choosing a loan. Consumers don't necessarily get a better deal by going directly to lenders, which also can charge excessive rates and fees."

Most important point last: The Journal reports, "California is an exception. A 1979 ruling by the state Supreme Court established that mortgage brokers there do have fiduciary duties. Pete Ogilvie, president-elect of the California Association of Mortgage Brokers says that hasn't caused him any problems and clarifies his role."

That last part, as I read it, means that a California-based mortgage broker has a legal duty to put the borrower's interests first --  which is interesting, because no one has mentioned that legal duty in comments or emails.

Comments? Feedback? Your thoughts are always welcome.

Comments

[www.BetterVillage.com]

My thought when I read the "four questions to ask your mortgage broker" was: "GET IT IN WRITING!"

In regards to California mortgage brokers having a fiduciary duty - there is some discussion of Wyatt versus Union Mortgage Company (1979) here:

http://www.plmweb.com/CMA%20Material/pdf%20files/Broker%20to%20Broker%20Agreements%20Program%20Final%207-17-06.pdf

[Sean Doherty]

Absolutely correct! You always want to make sure you have all of your information in writing! If you feel your mortgage broker is giving you the run around, whether it is a refinance, home purchase, or otherwise, visit my website, and we can walk you through it!
Sean Doherty
SD Realty