Fixing in advance the broker's total compensation from a transaction eliminates conflict between the interest of the broker and the interest of the customer. All these tricks aim to pad the broker's compensation. Lenders offer lower prices through brokers because brokers replace their costly sales and loan-processing force plus the infrastructure required to support it. Mortgage brokers can shop lenders much more effectively than consumers. Brokers are in the market every day, where consumers are in the market a few times during their lives.
Brokers receive price information from lenders daily as a matter of course.
They know the features of the transaction that affect the price and underwriting requirements. They have relationships with multiple lenders, and are therefore well positioned to find and shop among the lenders offering particular features. And they know the lenders who take 10 days to underwrite a loan and those who take one day. In addition, price differences between lenders are smaller in the wholesale market than in the retail market. This is because lenders know that brokers are careful and knowledgeable shoppers while most consumers are not.