When a broker is paid compensation by the lender in a transaction, the broker may not receive any compensation from the borrower. The percentage of compensation that a broker chooses to receive will be selected by the broker in advance and may not vary based on loan terms, product, interest rate or conditions. The compensation paid to the broker is determined by an agreement between the broker and wholesale lender and shall be set for a certain period of time. Third-party borrower costs cannot be paid by the broker; however, this is paid by the lender with any excess Lender Yield Spread Premium Credit over and above the set broker compensation which is applied to borrower's closing costs as paid by the lender. No additional compensation such as administrative and/or processing fees can be charged and/or paid by the borrower. The broker's compensation may not be increased or decreased except to reflect a change in the loan amount.
The broker is to be paid compensation by the borrower only. The broker or loan originator negotiates with the consumer directly regarding compensation that the borrower will pay directly to the broker. Under this Borrower-Paid option, the broker may not receive any compensation from the Lender or any third party. The amount of broker compensation can vary from one loan transaction to another. However, compensation from the broker to its loan originator for any particular transaction may be comprised of only salary or an hourly wage. Other aggregate bonus related compensation from the broker to its loan originator cannot be based on loan terms or conditions or profitability of the loan or the broker. Compensation cannot be paid through the interest rate or other prohibited terms, however, it can be financed into the loan amount or paid in cash at closing by the consumer. Interest rate rebate credits cannot be used to compensate the broker or loan originator. The borrower may pay discount points to the Lender to reduce the interest rate and the broker may pay towards the borrower's closing costs.