SOURCE: RT Brokerage Services, Inc.

RT Brokerage Services, Inc.

November 20, 2009 01:30 ET

RT Brokerage Services Calls for an End to Mortgage Underwriters' "Don't Ask, Don't Tell" Policy

SEATTLE, WA--(Marketwire - November 20, 2009) - Advertising buyer commission rebates is central to the discount real estate brokerage's message, but properly accounting for them falls into a gray area. Most conventional mortgage lenders say they absolutely prohibit any kind of payment paid outside of closing, including real estate commission rebates. "Then how are these advertised rebate checks possible?" asks Louis Herrera, CEO of RT Brokerage Services.

"It took careful investigating, but we found the loophole," states Mr. Herrera. "Most underwriting happens far away from where a loan is initially submitted, so most underwriters have no idea whether brokerage A or brokerage B is a discount brokerage. Since the underwriters do not have a disclosure policy for buyer real estate commission rebates, they have no way of knowing whether a commission rebate is part of the transaction, and the borrower or brokerage has no obligation to disclose such a rebate."

Mortgage regulators have worked hard to make the home-lending process transparent. Yet the final HUD-1 Settlement Statements for some discount brokerages do not show a buyer rebate -- especially in cases where the commission rebate exceeds the buyer's closing costs. "This has to change. Everything needs to be disclosed and clearly accounted for on the certified HUD-1 statement, regardless of the commission rebates amounts," says CEO Herrera. "Certainly, if I were a shareholder in any one of these lending institutions, I would want to know that the underwriters have presented a complete and accurate picture of any 'compensating factors' that might improve the borrower's ability to carry the loan."

"If underwriters can't find a way to include commission rebates that are in excess of a buyer's closing costs in their analysis, then they will have to develop a disclosure policy so that everyone offering commission rebates plays by the same rules," remarks Louis Herrera. "This week we sent a letter to the top 15 loan originators in the marketplace requesting their official policy on buyer real estate commission rebates, whether or not rebate checks can be paid outside of closing, and if they had any disclosure requirements. As we receive responses to our requests, we will post them on our website at"

About RT Brokerage Services

Founded in 2007, RT Brokerage Services is the pioneer in consumer-choice real estate. For more information, visit

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