A good lesson might be understanding what companies do what.

A Mortgage Banker is a direct lender typically offering Conforming Fannie Mae and Freddy Mac loans and Government loans. Sometimes they also have Alt-A and Sub-Prime too. Since they are a direct lender the LO sends loans to their own company for underwriting and closing. Some have these people right in their office for direct contact and communication.

A Mortgage Broker is a middle man dealing with wholesale investors. These investors are either strictly doing wholesale or also do retail/direct lending. The loan is sent to another company other than their own. Typically these lenders do not have government loans which is a huge piece of the puzzle you need. A score less than the typical conforming score of 620 would be at a disadvantage without FHA. FHA does not care about credit scores so someone who has a 500-560 or <500 may get a loan with no out of pocket money and a fixed rate of 6-7% rather than an 80/20 at 8-10% fixed or 7-8% on an arm loan.

So for example my company is a Banker and a Broker. This is kind of rare... 1 stop shop though. That is why I picked them.

Some loan officers sell what they have. So they might not even know anything about FHA. They also may not know how Fannie Mae and Freddy Mac work. IE level approvals on sub 620 scores etc.

I think this post should really help you know what is best for your customer.

There is a negative though. When a lender is a direct lender they may tend to try and stay in-house or not shop the wholesale market as in depth as a broker does... They also may not understand who has the best deal on the wholesale avenues.

I disclose a dollar amount of yield spread on my GFE. I tell the customer how yield spread works.

Basically if your customer qualifies for 6.00% a loan officer can sell them 6.5% and get paid a % of the loan amount by the lender...

Good info to know.

Bankers do not have to disclose yield spread on a HUD statement. Brokers always have too unless they have some sort of corespondent relationship with a lender.

It would be considered SRP if it were a bankered transaction Greg...just an fyi.

SRP is what the investor pays for the loan when they buy it form the originating company.

For example when an FHA loan is sold they pay a % of the loan amount.

We, as loan officers, do not get a cut of the SRP. (Some loan officers may though)

Direct lenders upsell rate too. Bankers as well. But, it sometimes does not work like a broker. Especially in a salary + commission pay structure.

Mine is like a broker though. A split. Origination, Unuesed Discount Points, and Yield Spread Premium.

Wow you start early too huh lol!

I get paid SRP on bankered transactions. YSP on brokered and correspondent.

Then you are one of the lucky ones. :-)

Sometimes we do but it is normally a special to try to get us to use a certain product.