Question:

What is a mortgage broker referral fee?

Answer:

A mortgage broker referral fee is usually the fee paid to the broker for directing borrowers to a particular lender, as well as directing borrowers to third-party service providers, such as mortgage insurers, title companies, etc.

Lenders and mortgage brokers collect referral fees from home appraiser, title and mortgage insurance companies, and others. According to the Real Estate Settlements Procedures Act (RESPA) mortgage lender and broker referrals are unwanted as they raise certain loan settlement costs. Consumers should be warned that they have the right to choose a different title or mortgage insurance company than the one recommended by the lender.

In fact, borrowers are advised to consider the mortgage lender/broker advice but do their own shopping to avoid paying unnecessary high settlement costs. In order to do that borrowers should request that the lender/broker provides in writing a breakdown of all 3rd party services, so that borrowers request more information and know what to be shopping for on their own.

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Common misspellings: mortage and morgage