Broker Compensation  

They are paid by the borrower in the form of a loan origination fee, mortgage broker fees, processing fees, etc. The funds used to pay these fees can come from loan proceeds in a refi and closing costs in purchase transaction. They can range from 0% to 4% depending on the loan amount and situation.
 
Brokers also can receive a yield spread premium (YSP) (also known as "rebate") paid to them from the lender for slightly marking up a rate on a clients loan. Mortgage brokers typically must disclose this YSP on the Hud closing statement (HUD-1).
 
Many times a mortgage broker will only receive compensation from one of these sources but can get it from both. In some cases I will not charge a dime as far as loan orignation fees, etc. but receive my compensation from the lender. In other cases I will charge a loan origination fe etc. but not get any compensation from the lender. It all really depends on what your client is trying to accomplish and thier plans for the property. Just remember no one works for free and mortgage brokers can typically get you a better deal than most banks and have more funding sources.

Banker Compensation

Banker's are paid typically the same way except that the yield spread premium that they recieve does not have to be disclosed at the time of closing on the Hud Settlement statement prepared by the title company.