Most mortgage brokers deliver loans to lenders or investors at a markup above the wholesale or PAR price. Lenders then pay the brokers a Yield Spread Premium (YSP) because they collect higher payments as a result of the higher interest rate. This back-end compensation from lenders gives the broker an incentive to work against borrowers' best interests.
Brokers go to great lengths to avoid disclosing compensation from lenders including becoming "lenders" so that they can close loans in their own name, then quickly sell servicing rights to the loans. This allows the brokers to collect YSP, service release premiums (SRP), and other compensation from lenders without disclosure to (and all too often at the expense of) their unsuspecting customers.
In contrast, an Upfront Mortgage Broker™ (UMB) discloses their total compensation in writing up front, and then works to get the best deal for the borrower.
Palmetto Commercial Lending, LLC provides client-level services as an Upfront Mortgage Broker™.
Read our commitment as an Upfront Commercial Mortgage Broker!
The Upfront Mortgage Brokers™ Commitment was conceived by Jack Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania, "The Mortgage Professor", as a mortgage brokers' ethical Code of Conduct. For more information on Upfront Mortgage Brokers contact us or visit the Upfront Mortgage Brokers Association (UMBA) website.