The financial crisis of 2007-2010 led to widespread calls for changes in the regulatory system.
As a result, two U.S. politicians, Barney Frank & Christopher Dodd, got together and wrote “The Financial Reform Act for America”…commonly called the Dodd-Frank Act.
A portion of that Act regulated the mortgage industry.
One of the regulations eliminated a practice called ‘Yield Spread Premium’ – which basically was a way for a loan originator to increase their commission by charging you a higher interest rate. And the new rules put a “maximum cap” on how much you can be charged for a home loan.
But the reality is that they only capped the visible charges – the ones that you plainly see on your Good Faith Estimate – but they put no cap on the unseen charges called the ‘Service Release Premium’.
This service release premium is yet another way for banks and mortgage banks to make more money – by charging you a higher rate!
The result has been that Mortgage Brokers, like Premier Mortgage Lending, are firmly regulated and now offer you the lowest rates – and charge NO FEES.
Banks & mortgage bankers have no limits on the profits they can make on your loan.