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Today's episode is about
commission chargebacks. A

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chargeback is when a funder or
lender takes back the commission

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that it gave to the broker.
Usually that might only happen

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for the first 30 to 60 days
after the deal is funded. And

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it's a way it makes sure that
the broker doesn't get

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compensated for a deal that was
destined to fail. Now, if you're

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a broker, that doesn't sound
very fair, does it? Why should

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you be penalized if underwriting
didn't catch that the deal was

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bad to begin with? But lenders
and funders say that the purpose

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of the provision, could be
called a chargeback provision.

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maybe a clawback provision, it's
to try and stop people from

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committing fraud at the outset,
the broker and the customer

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or that it's an incentive for
brokers to keep their eyes open,

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almost as if the broker is
really the frontlines of

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underwriting.

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Now however you feel about it, a
chargeback policy is something

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that every broker should look
for in an ISO agreement, or

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referral agreement, whatever
it's called. If something

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happens and deals go bad, you'll
want to be adequately prepared

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for what rights the lender of
funder has on your commission.