Can originators bypass the 3% points and fees cap?

by Diana Aqra21 May 2013

Originators are being urged to join correspondent lending networks as a possible way to skirt the 3% points and fees cap under the Dodd-Frank Act.

Craig Dodds, national sales manager of Amerisave Mortgage Corporation said one way mortgage brokers can avoid the regulation - set to take effect in 2014 - is to join a correspondent lending network. 
MPA's upcoming launch issue is set to examine the correspondent lending market, and Dodds said by becoming a correspondent, loan originators adhere to less stringent disclosures and bypass the 3% requirement because it is their sponsor who underwrites the loans and ultimately pays them. 
Rather than watching maxes on fees and points, the profit made by an individual loan officer will be determined by his compensation aggreement with his company, Dodds said.
Originators that have correspondent relationships will have the added opportunity to earn additional revenue through the sale of the closed loan into the secondary market.  
Final inclusions of the 3% cap on fees and points have not been determined, but they are said to be exceptionally constraining for some originators who work solely through wholesale and retail channels.  
The 3% cap may not be hurtful for lenders who already operate under such limits - origination fee (max 1%) and discount points (max 2%).


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