Broker Banks: Does Your Mortgage Broker Have a Dirty Little Secret


by Louie Latour - Date: 2007-01-04 - Word Count: 360 Share This!

Is your mortgage broker an actual broker, or simply a bank pretending to be a mortgage broker? Banks exploit a very large loophole in mortgage disclosure laws and frequently masquerade as mortgage brokers on the side. Here are several reasons you need to avoid Broker Banks and expensive mistakes you need to avoid.

The Real Estate Settlement Procedures Act (RESPA) protects homeowners in the United States by establishing requirements for disclosing mortgage lender markup and fees. When the bill was making its way through Congress, the Banking Lobby spent millions of dollars lobbying Congress to be excluded from this legislation. When RESPA became law, the Banks were exempt. This means Banks are not required to disclose how much they mark up your mortgage interest rate, and the reason you should never take out a mortgage loan from your Bank. Why would you even think about taking out a mortgage from someone that doesn't have to play by the rules?

Broker Banks exist to take advantage of the same loopholes enjoyed by the banks. These Broker Banks are nearly indistinguishable from a normal mortgage broker except for one thing. Just like a Bank, Broker Banks fund their mortgage loans with their own money instead of reselling loans from a wholesale mortgage lender. Because the Broker Bank funds your mortgage with their own money, they close on the loan in their own name. Aside from the fact that Banks and Broker Banks do not have to disclose how much they mark up your mortgage interest rate, why else should you never consider borrowing from a Bank or Broker Bank?

Banks and Broker Banks routinely charge Service Release Premium with their mortgage loans. Service Release Premium is the markup of your mortgage interest rate to make additional profit when your mortgage is sold on the secondary market. The Bank knows the wholesale mortgage interest rate you qualify for and marks this rate up to boost their profit margins. Because Banks and Broker Banks are exempt from RESPA laws, they can do this without telling anyone.

You can learn more about your mortgage options, including costly mistakes to avoid with a free, six part mortgage refinancing video tutorial.


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Louie Latour specializes in showing homeowners how to avoid costly mortgage mistakes and predatory lenders. For a free copy of "Mortgage Refinancing - What You Need to Know," which teaches strategies to find the best mortgage and save thousands of dollars in the process, visit Refiadvisor.com.

Claim your free mortgage refinance information guide today at: http://www.refiadvisor.com

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