Consumers who get their loans through brokers typically pay more than those who obtain them directly from the lender, claims a study prepared for the Department of Housing and Urban Development.
The study by Susan Woodward, a former chief economist for HUD, says total fees on $105,000 brokered loans were $4,000, compared with $3,150 for loans made directly by the lender.
Brokers often defend what is known as yield-spread premiums as a way for borrowers to reduce their upfront fees in exchange for paying a slightly higher interest rate. But the study found that the yield-spread premiums mainly benefited the brokers. For every $100 extra they paid in higher rates, the borrowers on average received only a $7 reduction in upfront fees.
The data underlying the study was collected in 2001. Roy DeLoach, executive vice president of the National Association of Mortgage Brokers, called the data "stale" and said other studies have shown consumers save money by obtaining loans through brokers.
Source: The Wall Street Journal, James R. Hagerty (05/30/08)
![](img src="https://images.secureserver.net /rcc/extranet/Marketing/Banners/15532_Reselle r199_468x60_red.gif")
