Upfront Mortgage Broker (UMB)

A mortgage broker who sets a fee for services, in writing, at the
outset of the transaction and acts as the borrower's agent in shopping for the best deal. Customers
of UMBs pay the broker's fee plus wholesale loan prices, which are disclosed at the customer's
request. In contrast, other mortgage brokers (MBs) add a markup to the wholesale prices and quote
only the resulting 'retail prices' to customers. Most MBs reveal their markup only in required
disclosures after an application has been submitted. UMBs credit customers with any rebates they
receive from lenders or home sellers that would otherwise increase the broker's fee beyond what was
agreed upon. Such rebates are often an added source of revenue to MBs. Once the UMB's fee has been
established, the UMB's interests are largely aligned with those of customers. In contrast, MBs are in
a conflict situation with customers.

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