October 16, 2002 Are mortgage broker fees limited to 5% even when the lender is not?
Yes, Mini-Code section 5-19-4(g) generally allows lenders to charge and collect from consumers at closing up to an additional 5% points of the original principal balance in real property transactions. Any fees paid to mortgage brokers are subject to this 5% points limitation, such that the total fees collected by both the lender and the mortgage broker cannot exceed 5% points. However, the Mini-Code provides a limited exception to this general rule. Namely, banks and HUD-approved lenders are exempt from the 5% points limitation, pursuant to Mini-Code section 5-19-31(a). However, this exemption does not extend to mortgage brokers. For example, if a HUD-approved lender wants to charge 7.99% in points on a real estate mortgage, then it may do so, but it may not pay any mortgage broker more than 5% points.
