Upfront mortgage brokers veer from traditional business model

Growing movement aims to improve loan shopping

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Q: "I want to be an Upfront Mortgage Broker because I already do business the UMB way. I am concerned, however, with the part of the UMB 'Commitment' that states that 'the broker will be the customer's representative or agent.' The model broker disclosure form of the National Association of Mortgage Brokers states that 'in connection with this mortgage loan we are acting as an independent contractor and not as your agent.' What does this mean?" A: The mortgage broker trade associations have always promoted the independent contractor model and warned against the agency model, because the agency opens the broker to claims of violation of fiduciary duty. If you want to be a UMB, however, you must accept the agency model and the obligations that come with it. Independent Contractor Versus Agency: The issue is a legal one but it has major financial ramifications. The independent contractor model views brokers as similar to merchants who buy at one price and sell at another. They can earn ...