Mortgage Brokers are Held to a Higher Standard than Banks and On-Line Lenders Like Quicken Loan

With the Supreme Court considering the Freeman versus Quicken Loan case, and Quicken's public statement regarding its policies, "Quicken has never charged unearned fees?  I think the verbiage will be the issue.  My bet is that it collects more in origination than it should. For a broker, if you charge points (which are fees that buy the interest rate down) you cannot get any YSP (credit for the interest rate chosen) - that makes sense. Quicken does not have disclose YSP, therefore, it can charge points and still collect the YSP with the rate it says has points. In the past the big builders that operated their own mortgage banking companies got away with horrible abuse.  They would tell the buyer they would get $1,000 from the builder toward closing costs.  So, they simply said the buyer was getting a rate and the charge for the rate was 2% (points), actually that rate had a 2% YSP.  So, the buyer got $1,000 toward closing costs and the builder collected 2 points from the buyer and got 2 points YSP.  Pretty slick.

Many years ago builders were not allowed to own and operate a mortgage company.  A controlled business agreement with a bank was allowed, but the contract was very explicit. Then anything and everything was allowed, and now, nothing is allowed, unless you are a bank or an online lender. Banks and online lenders don't have to disclose how they make their money, or how much they make - is that fair? Quicken Loans proved that the loan discount fee in each instance was not unearned at all, because the fee was a component of the loan terms and pricing structure. In Federal Court, the clients could not offer an explanation as to why they were claiming that the fees were entirely unearned, and the facts in this case indicate that the clients freely agreed to pay the loan discount fees after the charges were disclosed to them multiple times before closing. The fees were earned as a component of the price the clients willingly paid in order to obtain the reduced interest rate they wanted. The Supreme Court case focuses on the specific wording of RESPA.