A trailer fee is compensation that a lender pays to a broker or lender rep as an incentive to keep his or her clients with that lender. Trailer fees are usually paid annually, on or around the anniversary of a client’s closing.
A renewal fee is compensation that a lender pays to a broker or lender rep once per mortgage term, when his or her clients renew with that lender.
Trailer and renewal fees compensate a mortgage originator for providing the borrower with ongoing mortgage advice and services. These two fees are paid on top of any upfront commissions and have long been common in industries like insurance and financial services.
Trailer and renewal fees are incentives that should be fully disclosed to the borrower, as they can sometime sway a broker’s or lender rep’s mortgage recommendation.
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