What are the differences between an Up Front Mortgage Broker and a regular Mortgage Broker?

Nothing. It is just a title to make them look better than the rest.

Some people have the weirdest marketing idea's and try to make themselves look better than the tarnished reputation of the mortgage broker industry.

I agree with Greg. The only real difference between an UMB and any other lender is that the UMB basically tells the client what they are making in commission upfront. UMB is a designation created by a Wharton B-school professor (www.mtgprofessor.com). His position is that consumers have difficulty shopping for mortgage loans because mortgages are so confusing, so to put everyone on a level playing field, instead of shopping for rates and fees, consumers should shop for commissions. He also feels that if consumers and LOs agree to a commission upfront, this prevents some of the games some unscrupulous LO's play and LOs can take a more fiduciary responsibility to their client.

Being an UMB sounds good in theory, but most consumers could simply careless what I make. I am never afraid to tell my clients what my commission is on a mortgage. Consumer just want to know what their rate and fees are...period. Also, just because you can get a consumer to agree to pay you 2 points on a deal upfront does not mean you are necessarily offering the best options and costs available.

Any good referral driven LO will always be upfront with their clients and enter into a fiduciary relationship with them. For instance, am working on a deal right now where I originally was going to net about $2500 on it. After reviewing my borrowers documents and some other things I found out I can increase my clients monthly savings from $100 to $250/month. However, the lower savings will result in my commission dropping to about $700. I know the higher savings are better for my client, so they are going to get the better deal and I won't make as much... on an hourly basis I am still make a hell of a lot of money and the referrals I get from this deal will more than make up for my commission loss.

Wow there really is a designation of UMB! Good post and much more info than I could provide with my 9 years.

Good business practice. Although I am not in that organization/designation I inform all my customers of exactly how yield spread works and fully disclose front and back even though it will not show on the HUD for in-house and correspondent lending.

So when the crafty broker says "he probably charged you YSP they can say yes and this was how much and I know how that works.

They come back to me though of course.

"Striving to be your lender for life" look at my site. It is why I am the way I am. Long term satisfied customers referring loans and coming back.

Greg, glad to hear you disclose your YSP. even when you dont have to.

..and how do you deal with the litton thing??


Jim

The other thing that is stupid about the whole UMB thing is that the LAW requires that brokers disclose their yield spread premium on the good faith estimate. Bankers do not have to disclose their service release premium. So if the law says I have to disclose it, then I am already acting as an upfront broker if I am being compliant.

The problem is that most consumers are so focused on getting something for nothing and many brokers are too sheisty to accurately disclose it. Hell, most realtors can't read anything on a HUD-1 other than their commission line, so how is a consumer going to know what to look for? The YSP is usually buried on the HUD-1 as a POC item and I would be really surprised if most brokers actually put it on their initial GFE's.

The whole concept is just a clever marketing ploy. Unfortunately, because there are so many sheisters in the mortgage business, it is very easy to market yourself as above the fray. Kind of like car dealerships who don't negotiate (Carmax, saturn, etc) since so many car dealerships use sheisty sales tactics. Some people just prefer not to deal with that B.S.

Every broker has to figure out what works best for them.

I just don't understand the idea of always going with the cheapest in the first place. I can't remember the last time I ran into someone who bought all their clothing at Wal-Mart and had their taxes done every year at H&R Block.

Having your motto be "we're the cheapest around" may not always be a good thing.

I am a real estate agent and loan officer and I use the principals of the upfront mortgage systems. I feel this helps me perform my fiduciary responsiblity to my client by disclosing my fee structure for mortgages at my first meeting. I include this in my open house flyers and make it a document I include with marketing left for buyers and sellers. This helps me fulfill my fiduciary duties to my client and the disclosure is your record to define and defend your agency assertions. On my first meeting, if possible, I explain agency and how my loan services work and my fees. Disclose, Disclose, Disclose

I consider myself an upfront mortgage broker NOT by affiliation or because I need mortgage professor to pat me on the back but because this is how I choose to conduct my business. You are right people do care about the interest rate they are getting and if the payments are in line with what they can afford, then everything is just beautiful. However, when people know that they can get the wholesale rate (if they choose to) is very empowering to them. They end up paying the same anyways but they feel like they are in control and know they are not getting ripped off. All I can say is that it works for me.

"Nothing. It is just a title to make them look better than the rest.

Some people have the weirdest marketing idea's and try to make themselves look better than the tarnished reputation of the mortgage broker industry. by Greg Phillips

I couldn't have said it any better myself!

This guy is a joke. He has flawed logic throuout his entire website but I am sure he is making a killing because so many people are so uneducated about the loan process and I am sure he gets enough of them to stay profitable. What really turned me off is he tells people to go to bankrate.com and they seem to be the biggest bait and switchers out there.

I didn't see anything about BankRate.com....I did, however see he has a Beauty Consultant! What is that about Greg?

He recommends them along with a list of a few brokers. If you snoop around on his website youll see it. Also, CNN Money online just did a story about junk fees and they quoted him extensively in the story.

I notice that too! Him sending people to bankrate when in all reality bankrate is selling the borrowers' info as a lead to other mortgage brokers. I know because my boss has an account with bankrate. I wholeheartedly agree with being honest and treating the client fairly but his whole approach is wacked. It sounds more like brainwashing than anything else. No two loans are alike and no two borrowers' financial situation are alike. Of all people he should know that. His cookie cutter upfront flat fee is not always the best way to go for some people.

I really like this forum. Everyone seems to be helping others here vs. other forums. I have been in the business for 10 years and I have had my strugles early on in my career. My broker was as shady as they come. it almost put me into another career. However, I am the broker now and I put my own personal values into the mix. I am a christian , a father , husband , and mentor. My rule of thumb is. UPFRONT SELL. to my borrowers, to my realtors, to my employees. Its not rocket science. Anyone buying from me will know everything there is to know on fees, process, timeframe ect. think about it. upfront selling is education , education is key. key is success.

Go NOLES!!!!!!!!

Who were you talking about on this comment? I am pretty sure it was not me AZ. Bankrate.com has never been a direction I have told people to go for sure so I think he is talking about the UMB guy I saw trying to get people to get the designation...???

The beauty consultant is my wife. Actually we had our 7 yr anniversary yesterday. She sells Mary Kay and I try to help out.

Which litton situation Jim? There are so many! Let me know and I will give you an answer.

Basically I have yet to talk with a Mortgage Broker who was new in the business that was happy with their broker training and help. I cannot say enough about Home123 though. I have been through my first wholesale mortgage broker JOB! I sat at a desk for 4 hours with no instruction.

You are self employed no matter how you look at it and you are fully responsible for your actions and knowledge. A nice company is great and makes things easier and more affordable.

I really must retract my statement about UMB because I do not know what training you get and it may be worth it. Anyone inquire on it to see what is taught?

Bankrate.com is a great site. However, the people buying the service of posting rates are the crooks. They try to beat the other banks then often do not deliver. There is always some kind of excuse normally for not getting the rate published on the site.