July 13, 2000, Revised November 8, 2006
An Upfront Mortgage Brokertm (UMB) is one who has elected to do business
in an upfront and fully transparent way. The major differences between a
UMB and a conventional mortgage broker (MB) are:
1. UMBs disclose their fees to customers in advance and in writing, and
disclose the wholesale prices (rates and points) passed through from
lenders. Customers of UMBs pay the broker's fee plus wholesale loan
In contrast, conventional mortgage brokers (MBs) add a markup to the
wholesale prices, and quote the resulting “retail prices” to customers.
Most MBs reveal their markup only in required disclosures after an
application has been submitted.
2. The UMBs interests are fully aligned with those of customers. They
can thus represent borrowers in shopping for loans. In contrast, MBs
shopping the market are often in a conflict situation with customers.
*The loan type that best meets the customer's needs may not be the one
that allows the largest markup for the MB.
*MBs may profit by ignoring customer requests to lock the rate/points,
putting the customer at risk.
*MBs often increase their markup on customers who allow the rate/points
to float by not giving them the best available rate (the float rate)
when the loan is finally locked.
3. UMBs credit customers with any rebates they receive from third
parties. Mortgage brokers sometimes receive rebates from lenders or
concessions from home sellers. UMBs credit customers for any such
payments that would otherwise increase the broker’s fee beyond what was
In contrast, MBs may or may not credit customers for payments from third
parties, depending on the circumstances.
For the current list of UMBs, maintained by the Upfront Mortgage Brokers