Sprout Mortgage, which bills itself as a leading provider of nonconforming loans, says it’s giving mortgage brokers more control over how lender fees are presented to consumers in the loan estimate.
“It’s time to rethink the loan estimate,” said Sprout EVP and Chief Operating Officer, Nicholas Imbimbo, in a statement. “The launch of our advanced fee management mechanism eliminates process steps and provides much greater visibility into what borrowers will see related to lender fees.”
Once they’ve received a loan application, mortgage lenders have just three days to provide consumers with a loan estimate. In addition to the interest rate and principal and interest payments, the loan estimate details a laundry list of additional costs. These include lender fees such as origination charges, discount points and underwriting fees, which can’t increase unless there’s a change in the borrower’s circumstances.
Mortgage brokers have the option of earning a percentage of the loan amount directly from the lender, or they can charge clients an origination fee up front. Borrowers often prefer that the mortgage broker be paid by the lender, but they may end up with a higher interest rate if they go that route.
Sprout says the new fee management tool that it’s making available on April 1 is part of a larger initiative, Broker AdvantEDGE, aimed at helping brokers “enhance the borrower experience and expand their business.”
The wholesale mortgage lender expects the fee management tool will increase accuracy by allowing brokers to control data input, access compliance results prior to loan submission, fill out fewer forms and worksheets, and preview loan estimates before submitting loans for disclosure.
As a “non QM lender” Sprout buys mortgages originated by brokers that meet the requirements of its loan programs. These requirements can be more flexible than Fannie Mae and Freddie Mac’s.
Sprout’s alternative qualification loan programs, for example, can make it easier for investors or self-employed borrowers with credit scores of at least 660 to take out or refinance a mortgage on a primary residence, second home or investment property. The company also finances jumbo loans and mortgages for investors in residential and mixed-use properties.