Proposed Model for
Mortgage Broker Contract

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Notice to Prospective Borrower(s): Read this contract carefully so that you make an informed choice.

This contract is between:

[Name(s) of borrower(s)] the "Borrower(s)" or "you" and
[Name of mortgage broker company] located at [Address of mortgage broker company],
who has authorized [Representative of mortgage broker company]
to enter into this contract on its behalf. In this contract, the mortgage broker company and the mortgage broker are called "I" and the entity that will provide your mortgage loan funds is called "lender."

Who Do I Represent?

I REPRESENT YOU

Yes

No

I am your agent and I will get you the most favorable mortgage loan that meets your stated objectives. I will shop for your loan from among [number] lender(s). For my services, I will charge you a fee, but I will not receive any fee for your mortgage loan from a lender.

I REPRESENT YOU, BUT I MAY RECEIVE A FEE FROM A LENDER

Yes

No

I am your agent and I will get you the most favorable mortgage loan that meets your stated objectives. I will shop for your loan from among [number] lender(s). For my services, I may charge you a fee and I may also receive an additional fee for your mortgage loan from a lender.

I DO NOT REPRESENT YOU

Yes

No

I am not your agent. I arrange loans from lender(s). For my services, I get paid by lenders and borrowers.

I make mortgage loans available from
[ ] one lender: [Name of lender] [or]
[ ] [number] lenders.

What Will I Be Paid?

For arranging your loan of up to $

My TOTAL COMPENSATION will be made up of--

Fees YOU PAY me of: [$ amount and/or % of loan]

The amounts disclosed here apply only if you qualify for this loan.

We agree to the terms of this contract. By signing below, the mortgage broker further certifies that the information in this contract is accurate and complies with all provisions of section 8 of the Real Estate Settlement Procedures Act and 24 CFR part 3500.

Borrower(s) Signature and Date

Borrower(s) Signature and Date

Mortgage Broker License No. (Where applicable)

You are entitled to a copy of this contract. Signing this contract does not obligate you to obtain a mortgage loan through this mortgage broker, nor is it mortgage loan approval.

BORROWERS - KNOW YOUR RIGHTS!

ATTENTION BORROWER: This may be the largest and most important loan you get during your lifetime. You should be aware of certain rights before you enter into any loan agreement.

1. You have the RIGHT to shop for the best loan for you and compare the charges of different mortgage brokers and lenders.

2. You have the RIGHT to be informed about the total cost of your loan including the interest rate, points and other fees.

3. You have the RIGHT to ask for a Good Faith Estimate of all loan and settlement charges before you agree to the loan and pay any fees.

4. You have the RIGHT to know what fees are not refundable if you decide to cancel the loan agreement.

5. You have the RIGHT to ask your mortgage broker to explain exactly what the mortgage broker will do for you.

6. You have the RIGHT to know how much the mortgage broker is getting paid by you and the lender for your loan.

7. You have the RIGHT to ask questions about charges and loan terms that you do not understand.

8. You have the RIGHT to a credit decision that is not based on your race, color, religion, national origin, sex, marital status, age, or whether any income is from public assistance.

9. You have the RIGHT to know the reason if your loan was turned down.

10. You have the RIGHT to ask for the HUD settlement costs booklet "Buying Your Home."

_________________________________________________________________
"Buying Your Home" and other helpful information is available at HUD's WEB site: http://www.hud.gov/offices/hsg/sfh/res/respa_hm.cfm
For other questions call (800) 569-4287. _________________________________________________________________
[INSTRUCTIONS TO PREPARER: This contract shall be used by a mortgage broker who wishes to claim the qualified safe harbor provided in 24 CFR 3500.14(g)(2). At the top of the contract, insert the name of the prospective borrower(s), the name and address of the mortgage broker's company, and the name of the mortgage broker representative.

Mark the applicable box from among "I REPRESENT YOU," "I REPRESENT YOU, BUT I MAY RECEIVE A FEE FROM A LENDER," or "I DO NOT REPRESENT YOU." If either of the first two boxes are marked, in the appropriate box, state the number of lenders that will be shopped for the loan. If "I DO NOT REPRESENT YOU" is selected, mark the applicable line corresponding to either: (1) "one lender" (insert the name of the lender), or (2) "_[number]_____ lenders" (insert the number of lenders).

Under "Compensation," fill in: (1) the loan amount (which may be stated in terms of an "up to" amount) and the interest rate for the loan (in the case of ARMs, attach or reference descriptive material for the particular ARM program); (2) the points and other compensation to be received by the broker for the loan; (3) the total compensation to be paid to the mortgage broker for the loan including all points and other compensation which may be paid by the borrower and/or the lender; (4) the applicable dollar amount or percentage of mortgage loan principal amount that represents the prospective borrower(s) direct fee (including points, application and any other origination fees)(if none, put "NONE"); and (5) the maximum indirect fees that may be received from the lender in connection with providing the borrower(s) a mortgage loan (if none, put "NONE").

The prospective borrower(s) and the mortgage broker are to sign and date the contract. The preparer is to fill in the mortgage broker license number where indicated or fill in "State does not license mortgage brokers" if applicable. One copy is to be provided to the prospective borrower(s); another is to be retained in the borrower's mortgage loan file. This contract is to be in clear and conspicuous type. The heading "APPENDIX F TO PART 3500" and these INSTRUCTIONS TO PREPARER should not appear on the contract.]