Servicing, Points and Back End - Posted by John Behle
Posted by John Behle on May 16, 1999 at 17:19:18:
As well as the servicing that Bud mentioned, the points go to the mortgage company or other lender making the loan.
In addition, there are points on the back end. The final lender (funding source) pays additional fees to the brokerage making the loan. This is a premium paid by the funding source that is built into the interest rate. It looks good to the borrower because they are not paying as many points as they used to have to, yet they pay a higher rate in return.
A mortgage company could make a profit without up front points or loan servicing - just off the back end fees they make.