Mortgage Broker Fee, How much?

[Rude Awakening]

Sorry it sounded confusing or it came out wrong Ken.
Yes the lender does pay us YSP according to how high we sell the client on the interest rate. However it's not a fee that the client comes up with at closing or is charged at the closing table. How much a Loan Officer charges YSP depends on his morals and his thoughts on the issue.
You must remember that most mortgage companies, just like Real Estate companies have a split between the employee and the broker. Many states dont allow Loan Officers to be W-2'd and the few that do require LO's to have a license. The split that a mortgage company pays greatly varies from company to company. New loan officers tend to get a 50/50 split and work their way up to 70% overtime. Companies that provide leads and marketing start much lower at around 30%. Of course the Broker wants his house fees as well and when it's all said and done, not all Loan Officers make as much money as you think. Notice I said not all because some of us are very successful and have created our network off of referrals.
So looking at the big picture many Realtors start at higher commission splits plus get the advantedge of being 1099'd. Some brokers require monthly desk fees and give you very high splits of 90%+ and some that offer advertising material are less.
In the end the relationship between a Realtor and Loan Officer should be mutual and friendly. I never complain about you making 2.7% and as long as my fees are justified and reasonable, you shouldnt complain either right?

[kensmith]

Everyone has to earn a living, but I have fired more than a couple LO's because in my opinion they have overcharged my clients. Currently I have an LO that understands that what he does reflects on me as I send my clients to him. He also understands that you will never last in either of our businesses if you are looking at just the current deal. Every client is worth thousands in referrals and repeat business if you treat them fairly.

As for splits, there is one big difference. When an LO is a W2 employee as they are in IL the office has an expense of matching SS and medicare (agents pay this themselves). Plus in IL they must pay the LO an hourly rate even if they don't have a closing. Also most offices in our area pay for part or all of their LO's insurance. So if an LO got about 80-85% it would be equal to an agent getting 100%.

When all is said and done I want my LO to make a fair amount on each deal and my client to get the mortgage that works for them. My ethical duty is to my client and if that means telling them that an LO is overcharging them you better believe I will do it.

BTW, not sure where you come up with 2.7% for agents, but that number wouldn't be accurate for most markets.

[Rude Awakening]

Wow I didnt know markets are so different.

Your first paragraph regarding the understanding of LO's and their fees and etc, I completely agree with you on. All of us are commission based and we all know that to be successful you need to take care of your clients in order to continue your path of survival in this business. That's why the turn around rate of Realtors and LO's quitting in their first year is over 70%.

I'm in Minnesota and here things work much differently. The job is considered commission only by almost all companies, unless you're a branch manager, processor, owner and etc. As a W-2'd employee you pay all your taxes upfront, they deduct medical which the company pays for half here at our office, and this is all reduced after the 50% cut.

1099 employees such as myself however are in very similar circumstances as you. I have to pay $470/month for Health Insurance for my wife and I, and pay for all my own expenses.

In Minnesota the average pay out to a buyers agent is 2.7% or if they really want to get it out the door, 3%. That's what I based my last post on

So I'm 100% with you about being fair and sometimes you have to make sacrifices to make things work. 3 years in business there is one loan I'll never forget even if I ever get Amnesia...

I had a client with a 529 mid credit score with a Bankruptcy from a Divorce trying to buy a house 100% Full Doc. Collections were plenty and a lack of tradelines existed as well. You guys are all probably like... dumb loan officer, he'll never get it. The thing is, he made good money and had excellent credit all his life, but a divorce shot his credit through the crappers and left him with nothing. Fortunately we were able to get the sellers to carry back 15% (legally) and did one loan through Long Beach Mortgage for 85%. Now this was only the beginning because in the divorce decree a whopping child support payment of $800/month showed up which we were able to counter with boarders income (another topic Ill have to post sometime). Of course he didn't have trade lines after the bankruptcy so we had to get some alternative trade lines. By this time I just wanted to prove a point and that I will get this bastard done. Even with all of our efforts the DTI ended up coming too high at 54%. I already cut all my YSP and was seriously ticked off. I called the VP of Long Beach's branch and he offered to reduce his rate by .4 bps enough to get us at 49.99% DTI. The day of closing, no one knew if we were even going to close! Of course the client has to payoff his collections that were remaining on his credit and didnt have any money to do it. ALL WE NEEDED WAS 3,800! I was like DUDE YOU WANT TO BUY A HOUSE and you cant afford a couple thousand?! Well it was Christmas time and he had spent all his money on gifts so I had the listing agent, buyer's agent and myself each chip in 1300 to get it done. I made... $800 total I think.
The guy is a Sr. Manager in a Lincoln/Mercury dealership and has sent me tons of referrals that made up for the headache.

I was happy that both the listing and sellers agent helped out with the closing costs. I mean the listing agent cared about his seller and we cared about ours. That and after all that work I wasnt going to let the client go that easily

Alot of Realtors and Loan Officers are really strict and tough about waiving or reducing fees when it comes to crunch time. Sometimes you need to do what you have to, to get the job done. Sometimes I make a mistake, sometimes an Agent will make a mistake and sometimes the client is a mistake. But hey close it, learn from it and move on.

[kensmith]

and sometimes the client is a mistake. But hey close it, learn from it and move on.

Learning what client to work with and which to let go is one of the hardest things about this business.

Really don't think we see things to different, just different markets make any blanket statements hard. We all have to remember that what is true in our market may not be true everywhere as real estate is still a localized business.

[Remaxman]

I have yet to see a mortgage broker beat a bank in closing costs, interest rates etc. Now we dont get many deals as large as this, we a po country area in Kentucky, but everytime I try to use a mortgage broker (after the endless phone calls, dinner invites asking to give them a chance) I about fall out of my chair when I see the closing costs....now if your dealing with a poor credit score then fine thats understandable, but when I send A+ paper type people and get 1500 to 2000 higher costs thats insane.

The best junk fee I have ever seen in 11 years is a 175.00 e-mail fee....yes, an e-mail fee...when questioned (at the closing table since we didnt get to review prior to) the reply was we gotta eat to. Gotta love it