Broker Compensation Overview

Transcription

1 Broker Compensation Overview

2 Paid Pid by either the Borrower or the Lender, but not both. Lender paid compensation is: Calculated as a percentage of the loan amount according to the Compensation Agreement A Fixed Percentage tagethat atcannot vary yby transaction Borrow paid compensation: Can vary based on transaction Borrower Credits Available for both Borrower and Lender paid comp plans Borrower credit may be used to pay pyclosing costs and pre pays 2

3 Broker negotiates t directly with the borrower Compensation can vary from one transaction to another. Broker may not receive compensation, directly or indirectly, from any person other than the borrower in the transaction. Borrower may use a Borrower Credit to pay closing costs and pre pay items, but may not pay broker fees. When borrower paid compensation is selected, brokers can never receive compensation from CountryPlace. Brokers may not credit their compensation for any reason, including curing RESPA tolerance issues. 3

4 Compensation can be paid in cash by the borrower, paid by the seller or financed through the loan proceeds, if allowed by investor guidelines. Seller concessions may be used to pay broker s compensation,,provided it is not prohibited by the sales contract. 4

5 Compensation $100,000 Loan Amount 1.50% origination fee $500 processing fee Total compensation=$2,000 Pricing Examples 3.75% rate: Borrower pays 2.20% discount 4.25% rate: Borrower receives 5.70% Borrower Credit towards closing costs and/or pre pay pay items Rate Price Discount Charge/ Borrower Credit 3.750% % % % % % Note: Borrower Credit can never be used to offset broker revenue fees or compensation. 5

6 Compensation percentage is selected in advance Must have an executed Compensation Agreement with CountryPlace CountryPlace s compensation levels vary from 1.5% to 4.0% in.50% point increments Compensation levels must remain in effect for a minimum of 6 months. Compensation is a percentage of the loan amount Broker cannot collect any other compensation from any other party (such as borrower or seller) including: Underwriting fees Administrative fees Processing fees A processing fee can be charged outside of broker compensation only if its a bona fide 3 rd party with no affiliation. Paid directly to the processor or processing company through closing. Broker must provide evidence they paid in full in order to receive direct payment. 6

7 Borrower can use Borrower Credit to pay closing costs and pre pay items Seller can contribute funds towards third party fees based on the sales contract Seller cannot contribute to broker compensation Broker cannot reduce compensation or give credits for third party fees Broker cannot charge revenue fees or origination fees to the borrower 7

8 Broker s compensation amount cannot be reduced for any reason, including: Lock extension fees (must be paid by borrower) Cure of a fee tolerance violation 8

9 Compensation B k Broker selected to receive 2.0% per Compensation Agreement $100, Loan Amount Broker cannot charge any revenue fees Total compensation=$2,000 Rate Price Broker Comp Discount Charge/ Borrower Credit 3.750% % % Pricing Examples 375% 3.75% rate: Borrower pays 420% 4.20% discount 4.25% rate: Borrower receives 3.70% Borrower Credit towards closing costs and pre pay items 4.125% % % Note: Borrower Credit can never be used to offset broker revenue fees or compensation. 9

10 Lender Compensation does not allow brokers to reduce compensation to cure problems such as: Rate Lock Extensions Curing costs in excess of 10.0% tolerance on GFE High Cost APR or points and fees Broker applications without correct initial disclosures will not be accepted Brokers may not credit their compensation for any reason, including curing RESPA tolerance issues If at any time the broker fails to choose a rate that adequately covers the brokers compensation, CountryPlace will cancel the application. A new application and re submission will be required. 10

11 Check the accuracy and completeness lt of the GFE and itemization of fees prior to submitting to CountryPlace You may for review prior to submission Lock for a realistic timeframe to avoid lock extensions Ensure accuracy and completeness of loan processing prior to submission to CountryPlace. Incomplete loan submissions i cause multiple li l underwriter reviews and are the most frequent cause of delayed closings Ensure third party fees are accurate 11

12 Compensation type may change from Lender Paid to Borrower Paid, or vice versa if an initial GFE has not been provided to the borrower If the GFE has been provided to the borrower, the borrower must submit a signed, written request that includes the reason for the change. For example, the borrower may wish to change from Borrower Paid to Lender Paid in order to bring less money to closing in exchange for a higher rate 12

13 Must be paid by the borrower Lock extension fees must Reduce the Borrower Credit, or Increase the Discount point Written Agreement must explain that the borrower is responsible for lock extension fees 13

14 Borrower Paid Lender Paid Source of Compensation Compensation Amount Paid by the Borrower from their own funds dsto the broker; either cash at closing, from loan proceeds, or seller concessions Compensation may vary per loan based on negotiations with the borrower. Must comply with high cost loan requirements CountryPlace pays the compensation o directly ectytoto the broker Compensation will be paid based on percentage of loan amount and range from 1.5% to 4.0% 14

15 Broker Concessions Borrower Credit Borrower Paid Broker may lower compensation or offer credits toward 3 rd party costs May be used to pay CountryPlace fees (i.e. admin fee, underwriting fee, extension fees, etc.) Cannot be used to pay any portion of the broker s compensation None Lender Paid May be used to pay CountryPlace fees (i.e. admin fee, underwriting fee, extension fees, etc.) Cannot be used to pay any portion of the broker s compensation 15

16 Block 1: Equals the total compensation paid to the broker, either by the lender or borrower plus CountryPlace fees (admin, underwriting, etc.) Block 2: Equals the net amount of borrower discount points or Borrower Credit plus any credits for Lender Paid Compensation. 16

17 Block 2 can change in the event of a valid Change of Circumstance, including: Initial rate lock Rate lock extension Borrower Pricing changes Change of loan characteristics that affects pricing (i.e. discount points) Block 1 fees CANNOT change, even with a Change of Circumstance Exception: If the loan amount changes and a portion of the Origination Charge is a percentage of the loan amount or the overall loan program changes 17

18 1 2 Block 1 will be calculated as follows: + Broker Origination Fee +Broker processing fee +CountryPlace l underwriting fee/admin fee Block 2 will be calculated as follows: Borrower Credit, or + Discount Points 18

19 1 2 1 Block 1 will be calculated as follows: + Lender Paid Compensation +CountryPlace underwriting fee/admin fee 1 2 Block 2 will be calculated as follows: Lender Paid Compensation Borrower Credit, or + Discount Points 19

20 Compensation $100,000 Loan Amount 1.5% % origination i fee $500 processing fee Total compensation=$2,000 Pricing Examples 3.875% rate: Borrower pays 0.80% discount =$800 Rate Price Discount Charge/ Borrower Credit 3.750% % % % % %

21 $3,200 1 x $ $4,000 Block 1 will be calculated as follows: $100,000 Loan Amount Block 2 will be calculated as 1.5% origination fee follows: $500 processing fee + Discount Points $800 $650 CountryPlace admin fee $550 CountryPlace underwriting fee Total fees=$3,200 21

22 Compensation $100,000 Loan Amount 1.5% % origination i fee $500 processing fee Total compensation=$2,000 Pricing Examples 4.00% rate: Borrower receives 0.50% borrower credit =$500 Rate Price Discount Charge/ Borrower Credit 3.750% % % % % %

23 $3,200 1 x $ (500) 2 $2,700 Block 1 will be calculated as follows: $100,000 Loan Amount Block 2 will be calculated as 1.5% origination fee follows: $500 processing fee Borrower Credit $(500) $650 CountryPlace admin fee $550 CountryPlace underwriting fee Total fees=$3,200 23

24 Broker Compensation Rate Price Broker selected to receive 2.0% per Compensation Agreement $100,000 Loan Amount Broker cannot charge any revenue fees Total compensation=$2,000 Pricing Examples 3.875% rate: Borrower pays 280% 2.80% discount = $2,800 Comp Discount Charge/ Borrower Credit 3.750% % % % % %

25 $3,200 1 x $ $4,000 Block 1 will be calculated as follows: Broker selected to receive 2.0% per Block 2 will be calculated as follows: Compensation Agreement + Discount Points $2,800 $100,000 Loan Amount Lender Paid Compensation $2,000 $650 CountryPlace admin fee $550 CountryPlace underwriting fee Total fees= $3,200 Total = $800 25

26 Broker Compensation Rate Price Broker selected to receive 2.0% per Compensation Agreement $100,000 Loan Amount Broker cannot charge any revenue fees Total compensation=$2,000 Pricing Examples Comp Discount Charge/ Borrower Credit 3.750% % % % % % % rate: Borrower pays 150% 1.50% discount = $1,500 Note: There is a discount not a Borrower Credit 26

27 $3,200 1 x $ (500) 2 $2,700 Block 2 will be calculated as follows: Block 1 will be calculated as follows: 1 + Discount 1 Points it $1,500 Broker selected to receive 2.0% per Lender Paid Compensation $2,000 Compensation Agreement Total = $(500) $100,000 Loan Amount $650 CountryPlace admin fee $550 CountryPlace underwriting fee Total fees= $3,200 Note: When discount is less than compensation plan a credit is created on the GFE; however there is not a Borrower Credit 27 2

28 Broker Compensation Broker CountryPlace pays broker $2,000 Rate Price Comp Discount Charge/ Borrower Credit Pricing 4.000% rate: Borrower pays 1.50% discount = $1,500 Credit for lender paid compensation = $2,000 CountryPlace Credit to Borrower=$500 (reflected in box 2 of GFE) Borrow Credit = $ % % % % % % Note: Any extension fees would be incurred borrower via discount points or the loan will be canceled. 28

29 Broker Compensation Rate Price Broker selected to receive 2.0% per Compensation Agreement $100,000 Loan Amount Broker cannot charge any revenue fees Total compensation=$2,000 Pricing Examples 4.250% rate: Borrower receives 370% 3.70% credit= $3,700 Comp Discount Charge/ Borrower Credit 3.750% % % % % %

30 $3,200 1 x 5, $ (5,700) 2 $(2,500) Block 2 will be calculated as follows: Block 1 will be calculated as follows: 1 Borrower 1 Credit $3,700 Broker selected to receive 2.0% per Lender Paid Compensation $2,000 Compensation Agreement Total = $(5,700) $100,000 Loan Amount $650 CountryPlace admin fee $550 CountryPlace underwriting fee Total fees= $3,

31 Broker Compensation Broker CountryPlace pays broker $2,000 Rate Price Comp Discount Charge/ Borrower Credit Pricing 4.000% rate: Borrower receives 3.70% 37 Borrower Credit= $3,700 CountryPlace Credit borrower $2,000 Borrow Credit= $3,700 which can only be used by the borrower to pay CountryPlace fees, other 3 rd party fees or prepay items 3.750% % % % % %