Thanks for the comment, and the insight into the world o’ brokers.

My main complaint (and why I won’t do business with him again) is that we discussed the very issues you raise on the first loan I did with him, for House #1. We specifically discussed the time frame I’d be holding the property, and went with a loan option with a very low origination fee and an oral agreement that I wouldn’t flip it too soon, causing him to lose the rebate.

That worked out fine for all parties involved, and was what I asked for when approaching him about the loan for House #2. It’s how the first version of the loan for House #2 was set up, with a loan origination fee of less than 1% and 90% financing. When he discovered that they were still offering some 95% financing for investment properties and he could squeeze me in, we went with that. That was the loan I got, which actually had a 2.5% origination fee that I was only aware of when we got to the closing table.

As I said, I should have insisted on seeing the details of the loan before it got to that stage, so I’m definitely at fault here. But he very definitely knew that the loan origination fee was a potential issue, considering the previous loan we did. I get that he’s just protecting his own interests, which is very understandable, but not communicating all of the details was fairly sleazy, especially since he knew my situation and expectations.

I do understand the point of charging more origination on an investment loan when the property is going to be sold in less than 4 months.

Typically most mortgage brokers make some money on the “back end” of the loan called a rebate. For most loan products offered by wholesale lenders the lower the rebate, the lower the rate.

Now, if a mortgage broker originates a loan and the borrower sells or refinances the property within approx. 120 days of funding, the lender can and will demand the rebate back from the mortgage broker. Ouch!

So, in your case, I would price your loan at par (no rebate, lower rate) and charge a “higher than normal” origination. Hope that makes sense.

I’m not siding with this broker just trying to provide you some more information. It seems like you’re really savvy and I love this site so far.