Thanks for the opportunity to "vent".

It is amazing how some people and organizations continue to give lip service to the notion that "service released premiums" are incentives to steer consumers to their detriment. THIS IS WRONG AND ANYONE WHO UNDERSTANDS THE SYSTEM WOULD KNOW THIS!  As a mortgage broker, I am required to disclose the fee(SRP) that will be paid to me for delivering a specific loan to the end investor. If I was a mortgage banker, or a bank, I could offer the exact same loan to the same client and this fee (probably larger than the fee that would be paid to the broker) would not be disclosed to the consumer. Does that mean that the bank does not receive compensation for the loan? Of course not.

Most banks operate as mortgage brokers but avoid the disclosure requirement because they are banks.

The APR, note rate and closing costs that are disclosed on the Truth in Lending and Good Faith Estimate are the consumers best source to compare loans programs being offered. Because the lenders have the option to use a service released premium to "buy a loan" from a mortgage broker, the consumer is able to better compare the package offered by a mortgage broker and the package offered by a bank. I believe that the pressure to eliminate the use of service released premiums is an effort by the banks to use their lobbying power to eliminate the mortgage broker competition, not an effort to help the consumer. Over the 25+ years that I have been a mortgage broker, my business has grown because my clients are smart enough to realize a good and fair deal. They come back and refer their friends and family. They are not stupid. They choose not to go to a bank and be forced to take it or leave it. They prefer to deal with someone that is only successful if they do it right.

I guess if I had the advertising budget that some of the banks have (thanks to the bail-out), I would do what I could to undermine my competition....or maybe, if I was smart, I should look at my business model and try to do it better and not unfairly change the rules to kill the competition. Of course the legislators don't have time to really understand the system that they are trying to regulate out of business.

Have a great day!