New federal rules have scuttled mortgage broker compensation often earned by steering consumers to costlier mortgages, but brokers say the rules could end up costing consumers elsewhere.
Effective April 6, 2011 with an amendment to Regulation Z, which implemented the Truth in Lending Act, mortgage brokers and loan originators lost the right to compensation based on a borrower’s interest rate or other loan terms.
The Federal Reserve order could save consumers thousands of dollars on a mortgage, that is, if brokers’ predictions about higher loan costs don’t materialize.
The most controversial compensation the order targets is was what was known as “yield spread premiums” or YSPs.
• Get the full story from MortgageMatch.com: “Will New Mortgage Broker Compensation Rules Save Consumers Money?”