Real Estate Settlement Procedures Act (RESPA) Disclosure of Fees Paid to Mortgage Brokers; Proposed Rule and Notice of Proposed Information Collection Requirements

Résumé

This proposed rule would provide consumers with more meaningful disclosures concerning the functions and fees of mortgage brokers while protecting consumers from fees which are illegal under the Real Estate Settlement Procedures Act (RESPA). At the same time, the rule would provide mortgage brokers with greater clarity regarding the application of RESPA to their fees. Under this rule, mortgage brokers who seek clarity regarding RESPA's applicability to their fees would enter into binding contracts with borrowers prior to the borrowers' applications for mortgage loans. For each particular loan transaction the broker would explain in the contract the services the broker would provide and the broker's duties to the borrower, how the broker's compensation is derived, and the maximum amount of compensation the broker would earn (based on the loan's interest rate and points). Under the contract, the broker would also disclose the components of its compensation including the direct fees to be paid to the broker by the borrower and the potential maximum amount of indirect compensation to be received by the broker from a lender providing mortgage loan funds. Because compensation to the brok