Upfront Mortgage Broker

Upfront Mortgage Broker (UMB)

A mortgage broker who sets a fee for services,in writing,at the outset of the transaction and acts as the bor- rower's agent in shopping for the best deal.

Customers of UMBs pay the broker's fee plus wholesale loan prices, which are disclosed at the customer's request. In contrast, other mortgage brokers (MBs) add a markup to the wholesale prices and quote only the resulting “retail prices” to customers. Most MBs reveal their markup only in required disclosures after an application has been submitted.

UMBs credit customers with any rebates they receive from lenders or home sellers that would otherwise increase the broker's fee beyond what was agreed upon. Such rebates are often an added source of revenue to MBs.

Once the UMB's fee has been established, the UMB's interests are largely aligned with those of customers. In contrast, MBs are in a conflict situation with customers.

A list of UMBs, showing their Web site addresses and the states in which they operate, is available on my Web site.

Many brokers who are not listed as UMBs are willing to operate in the same manner with borrowers who understand the value of broker services and won't faint when they hear the fee. Here is a form you can use.

Broker Compensation

The total compensation to [Name of broker], including any rebates from the lender, will be: _____________

A separate processing fee will be: ____________

I developed the UMB program in 2001. At the time of writing, there were 53 UMBs listed on my Web site.