It is important to understand that mortgage brokers must present loan options so as to avoid "steering" the borrower to a particular term or loan product to increase the broker's compensation.

In order to comply with the Anti-Steering provision, mortgage brokers must not present loan options to the borrower with the sole intent to increase the broker's compensation. The new regulation provides a safe harbor to facilitate compliance with the anti-steering requirement.

The safe-harbor is satisfied if:

o The consumer is presented with loan options for each type of transaction in which the consumer has expressed an interest; and
o The loan options presented include:
o the lowest interest rate for which the consumer qualifies;
o the lowest points and origination fees; and
o the lowest rate for which the consumer qualifies for a loan with no risky features, such as a prepayment penalty, negative amortization, or a balloon payment in the first seven years.

Brokers must present at least three options to the borrower. There is no need to present loan options from multiple lenders if the borrower only qualifies with one lender. The options presented must be from lenders with whom the broker currently originates loans.

For more information or to refer a client, please call (818) 888-7500.

Don Maher
Universal Capital Mortgage Corp
MLO#241202