Rhode Island Mortgage Brokers
However, at the time of settlement, they transfer these loans to lenders that simultaneously advance funds for the loans. This transaction is known in the lending industry as table funding. In table-funded transactions, the mortgage broker does not furnish the capital for the loans. Instead the lender provides the capital and, immediately after the loan is consummated, the mortgage broker delivers the loan package to that lender, including the promissory note, mortgage, evidence of insurance, and assignments of all rights the mortgage broker held.
In some transactions, mortgage brokers originate loans that are closed in the mortgage brokers' names, fund the loans temporarily using their own funds or a warehouse line of credit, and sell the loans after closing. These mortgage brokers function similarly to mortgage bankers, but they do not service loans. Still other mortgage brokers function purely as intermediaries between borrowers and lending sources.
They originate loans by providing loan processing and arranging for the provision of funds by lenders. The loans are closed in the names of the funding lenders. Frequently, mortgage brokers offer payment options that enable the borrower to pay lower fees and points, or even no fees or points, in exchange for a higher interest rate, or higher points and fees for a lower interest rate.
If the borrower pays lower fees and points and agrees to a higher Rhode Island interest rate, then the lender will pay the mortgage broker a fee that reflects the higher interest payments the lender will receive from the borrower.
Indirect fees paid by lenders to mortgage brokers are largely based on the interest rate of the loan entered into by the borrower and the amount of points and direct fees paid by the borrower.
Usually, one or more times a day, lenders set prices that they are willing to pay to mortgage brokers for loans delivered to them. The price to be paid for a loan is generally expressed as a percentage of the loan amount.
These prices are based on the Rhode Island interest rate of the loan arranged by the mortgage broker and the points and fees for the loan as compared to the price that the lender would purchase the loan for that day. The price that the lender will pay is, in turn, based on the value of the loan in the secondary mortgage market. Typically, the greater the difference between the rate a loan is entered into with the consumer and the market price for the loan, the greater the total compensation that will be paid to the broker. The price may also reflect factors such as the type of loan, the lock-in period, and the creditworthiness of the borrower.
The amount of money that the lender pays the mortgage broker, therefore, is based on the differential between the combinations of rates and points that is the par or market rate for a loan at a given time, and the combination of rate and points at which the loan is entered into with the borrower.