a. Can lender or brokerage companies pass through third party processing or document prep fees without it being considered compensation? As long as the broker or its employees are not keeping the fees, these should not be considered loan originator compensation and should not be subject to the loan originator compensation rule.
b. Can a broker charge a processing fee directly to a borrower and then turn around and pay a processor that works for the company part of that fee? Is the processor subject to the rules? If the processor does not meet the definition of “loan originator “under the rule, then his or her compensation is not subject to the rule. A loan originator means a person who for compensation or other monetary gain, or in expectation of compensation or other monetary gain, arranges, negotiates, or otherwise obtains an extension of consumer credit for another person. Individuals who are employed by a creditor or loan originator (i.e., mortgage broker or mortgage brokerage company) but do not arrange, negotiate, or otherwise obtain an extension of credit for a consumer, and whose compensation is not based on whether any particular loan is originated, are not loan originators.
c. Are “junk fees” paid by the borrower to the company considered comp that means broker and or loan officer can’t get paid on the back end? If the fees are paid by the consumer to a “company” that is a loan originator (i.e., mortgage broker or mortgage brokerage company), then the loan originator is receiving compensation directly from a consumer and may not receive compensation, directly or indirectly, from any person other than the consumer in connection with the transaction.
d. Can you pay the loan officer different on leads provided vs. leads they bring in on their own?To the extent differences in a lender’s costs exist depending on how loans are produced, they can be reflected in differing compensation to the originator.
e. Can broker pay their loan officers differently for two different investors/wholesalers? It depends, if the different payment structures are not based on impermissible terms or conditions (interest rates, PPP, etc.) or proxies for terms and conditions (eg., credit score or DTI ratios), but other permissible factors, such as hours worked, it may be possible to structure differing compensation in this regard. However, if an employee is merely paying loan officers during the same time period 50 basis points for loans sold to Investor A and 75 basis points for loan sold to Investor B, this would appear to be problematic under the rule.
f. Mortgage brokerage: Borrower pays the brokerage directly. Is the loan officer working for the brokerage on the deal exempt from Rule 2? No. The mortgage brokerage employee is him or herself also considered a loan originator under the rule and is subject to the rule’s requirements and restrictions on loan originator compensation.