Dave, I had read from several places that you can get compensation directly from the borrower after April 1, or from the lender, but not both. I thought that was the way to go. But now I am hearing that if I am an originator working for a broker, it will not work. I am confused. Chris from Texas
I deferred this question to legal expert Jim Milano of WBSK. Here is his response: This is consistent with my understanding of the rule. A mortgage brokerage companies’ LO is a Loan Originator for purposes of the rule, thus to pay broker points, or 50% of brokerage company points received by the mortgage brokerage company to the broker’s LO would be compensating a Loan Originator on the basis of terms and conditions of the loan. A mortgage brokerage company is also a Loan Originator for purposes of the rule and can be compensated directly by the consumer, but consumers do not pay loan officers directly. Thus, when paying its loan officer employees, regardless of source of compensation, mortgage brokerage companies cannot pay those loan officers based on the terms and conditions of the loan. To merely say “I will pay you half of the origination fee you bring in” would violate the rule. This is catching quite a few people by surprise, but that is the rule. James M. Milano, Weiner Brodsky Sidman Kider PC, 202 628 2000 firstname.lastname@example.org.