Loan Officer Compensation –Revisions Coming

The Consumer Financial Protection Bureau plans on taking a close look at the Federal Reserve’s controversial loan officer compensation rule and will issue a new proposal “soon” according to a top official at the young agency. CFPB acting assistant director Peter Carroll told a Women in Housing and Finance symposium that the agency is particularly interested in transactions where the consumer pays discount points and “how that affects creditor-paid transactions,” he said. Finalized in the summer of 2010, the Fed rule prohibits dual compensation and restricts LOs at brokerage firms from being compensated by the consumer and the wholesale lender in the same transaction. The rule also bans LOs from making less money on a deal and passing that savings onto the borrower. The Dodd-Frank Act transferred the Fed’s jurisdiction for the LO compensation rule to the new consumer bureau in July 2011. “We are re-visiting some of the issues around that rulemaking as well as other items that were given to us in the Dodd-Frank Act,” Carroll said. “We are working on it now and hopefully will have a proposed rule soon,” he said. Carroll heads CFPB’s ‘Office of Mortgage Markets’ which monitors the residential finance industry. His group is responsible for how rules impact both consumers and lenders. Source: National Mortgage News

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2 Responses to Loan Officer Compensation –Revisions Coming

  1. Domingo J Herrera says:

    I noticed the article above says “at brokerage firms”. Am I to assume that dual compensation is allowable at say: Chase/BofA/Wells Fargo with thsie LO’s? How about Correspondent Lenders?

    Please clarify How and what specific institutions/entities would be able to receive dual compensation?

    Your comments please

    Thank You

    • davehershman says:

      Good question. I am not an attorney so please do not take my advise on this. With regard to lenders, loan officers can never receive compensation directly from the borrower–compensation comes from the lender themselves. So it is my understanding the borrrowers applying from a lender can pay points while the lender still is using some of the rebate as income to the company (not loan officer). Anyone else have a thought on this?

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