From the January issue: Richard Bouchner, who co-founded real estate and mortgage brokerage
Commodore Property Group in 2003, thought last month that business was
returning after a tough year for mortgage brokers.
He’d gotten a referral for a borrower he described as a
well-qualified, financially savvy New Yorker buying her first
apartment. He’d arranged a 30-year fixed mortgage of around $480,000,
at 5.125 percent with no points. Then his client read the fine print, saw that he’d make $4,800 on the deal, and opted to get her loan from the bank instead.
“She said, ‘Rich, I don’t feel comfortable with this yield-spread
premium,’” Bouchner recalled, referring to the money a mortgage broker
makes for locking in an interest rate above par on a loan for a
borrower. Banks don’t have to provide similar disclosure on their
profit on a loan.