We will begin working with a Third Party Originator (which is the same as a Mortgage Broker). The TPO will work with prospective applicants and will send us mortgage applications if they determine that our product/pricing best fits their client’s needs. The TPO charges a fee for this service which we will then pass along to the applicant. The fee is for “services rendered” and is not a commission. The TPO does not process or underwrite the loan. Once they have triggered TRID (receipt of ALIENS), they send the application to us and we will generate and send out the Loan Estimate. We then process and fund the loan.

Would the TPO/Broker fee be shown in Section “A” for Origination Charges? We need to show a general label that clearly describes the service for which the fee is being charged. Would “Broker Services” be descriptive enough? It does not look like the Closing Disclosure will allow us to indicate who this fee is being paid to in Section “A”. (Ex: Broker Services to ABC Broker.) Is that a problem?

I’ve seen conflicting information in the threads where some say this fee belongs in Section “A” and others say Section “H” for “Other”. As this is a new service for us, I’m not sure where to show it. Is it Section A or H? Section A seems correct since this is an origination charge being paid to originate the loan, right?

Thank you for your help!

Can I ask how much the fee is that the "broker" is charging the borrower for basically doing nothing for them? This does not sound like how a typical mortgage broker/lender relationship works. Have you reviewed the broker/lender contract and vetted it against the RESPA Statement of Policy 1999-1? https://archives.hud.gov/news/1999/rspntce.html

While it does not sound like you are paying the broker, I would be hesitant to enter into a relationship with a broker that is charging the borrower directly if they are not "earning" their broker fee under that guidance.

It would be a Section A fee, it would be a finance charge and yes, the name of the originator to whom it is payable must be shown in Section A, if the payment is not to the lender.

Thank you very much! Management has reviewed the broker/lender contract and it is being vetted by legal. Looks like the fee will typically be 1% of the loan amount. I have not seen the contract to ensure that it is compliant with the RESPA policy statement but I am very curious as to what the broker is actually doing to earn a 1% fee!!