So the CFPB now effectively regulate all things financial, including mortgage lending. And I can guarantee you the biggest firms with the biggest wallets will have the greatest influence on the rules and and regulations "promulgated" going forward.
tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates
1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce.
2. To put (a law) into effect by formal public announcement.
It just is how it is...But you as a consumer, Realtor, mortgage originator can share a big difference that really ends up being a very real and valid reason to use a mortgage broker instead of a mortgage lender, or bank.
It's called up-selling or steering - also knowing as bait and switch in some cases. The cold hard truth is we have all been told the mortgage broker primarily caused the financial collapse of 2008 (which really started in 2007) but it isn't true. Sure the broker did plenty of things wrong and many broke the law and did loans in a way only a graphic artist could admire, but they didn't create the guidelines (lenders, investment bankers, secondary departments) and they certainly didn't pay exorbitant fees to obtain those loans (investment banks, pension funds, fannie and freddie).
But a lender doesn't share beneficial swings in the market to consumers like a broker can. Example, you lock your rate with Bank of America, and three days later the market rallies, everyone buys treasuries and demand for mortgages (by institutions) increases thereby decreasing the cost and interest rates being offered. Bank of America will pocket the difference and not allow you to relock at the new market rate, with-out a hit. Whereas, a broker can simply re-trade that loan with another investor at a lower price, and share the savings with you the borrower.
Even worse, assume you don't even know the market had improved and you just take the rate you locked. If the bank sells that loan for even more, they don't share it with you. The banks and direct lenders can offer the better pricing but don't most of the time.
Even the rules allow for variable commissions and "generally prohibit the acts that should ALWAYS be prohibited. Read the CFPB rule below - in summary:
"To prevent incentives to “up-charge” consumers on their loans, the final rule generally
prohibits loan originator compensation based upon the profitability of a transaction or a
pool of transactions. However, the final rule clarifies the application of this prohibition
to various kinds of retirement and profit-sharing plans. For example, mortgage-related
business profits can be used to make contributions to certain tax-advantaged retirement
plans, such as a 401(k) plan, and to make bonuses and contributions to other plans that
do not exceed ten percent of the individual loan originator’s total compensation."
So next time you think about choosing a broker versus a banker or bank, or direct lender. Make sure you understand a broker works for you to aid you in finding the best deal from multiple investors. The direct lender is only going to offer you their best pricing that day. AND they can mark up there prices without you even noticing since disclosure laws are easier for direct lenders.
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