We are considering changing our relationship with mortgage brokers. Currently, we pay the mortgage broker 1/2 point at closing and it is disclosed on the GFE as a fee paid by bank to broker. Is there a problem changing to the following scenario: Our rate is 6.25% for a 30yr fixed and we will pay the broker 1/2 point. If they submit a loan for a 30yr fixed at 6.50%, we will pay the broker 1%. I've been told that this is a common practice among bankers and brokers and that as long as we're consistent, it is okay. Of course, we would have a rate schedule and the broker can't just make up rates. Also, how would the payment to the broker be disclosed? The same way we do it now? and if so, how about the difference in the rate? Does that have to be disclosed?? Please help.