A Mortgage Broker Fee Agreement – What it is and Why It Matters

A mortgage broker fee agreement between a mortgage broker and loan originator should include an explicit declaration that: (1) the mortgage broker is representing the lender is offering the mortgage to the applicant; (2) that the mortgage broker is subject to discipline by its regulatory commission; and (3) that the mortgage broker will only accept the fees it is required to pay under this agreement if it is absolutely convinced that the proposed fee schedule is in the best interest of the mortgage applicant.

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Mortgage Broker Fee Agreement

In addition to these requirements, the mortgage broker fee agreement should also include an express declaration by the lender that the lender reserves the right to change the fee structure at any time provided that such a change is clearly detailed in writing and that all other conditions with respect to the fees are also met. The fee schedule should also include an express description of the manner in which fees will be assessed and collected by the mortgage broker on behalf of the lender Mortgages. Finally, the fee schedule should include a detailed explanation of all costs associated with the mortgage broker services and a description of any additional fees that the mortgage broker may charge the applicant for its services.

There are few clauses in the loan originators’ mortgage broker fee agreement that can cause problems for the lender or the applicant. One such clause is the language that states that if the lender or the applicant requests a change in the fee structure, the lender or the applicant must first get written authorization from either the lender or the applicant to do so. This language, along with the use of certain vague terminology makes it very difficult for borrowers to understand their obligations when they sign a mortgage broker fee agreement. Another problem with the above mentioned provisions is that they often create a conflict between the lender and the mortgage broker or the loan originator.

Final Words

A well-written and clearly worded commercial mortgage broker fee agreement helps both parties to fully understand their obligations and financial ramifications. Such an agreement helps to protect the interests of both parties and help prevent undesirable implications that arise when one party or the other expects certain results based on the agreements that have been written. A mortgage broker’s fee is often one of the largest components of any mortgage loan. The fee should be competitive and commensurate with the services that he or she provides.