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As rates rise and the refinance market settles down, purchase-loan production – and skilled loan originators – are expected to become increasingly important. And that is driving some lenders to aggressively recruit other companies' existing LOs and offer them hard-to-resist compensation packages to jump ship. But too much creativity can be a bad thing, especially when there are rules in place to limit just how far unconventional earnings and benefits plans can go.
Inside Mortgage Finance’s Guide to the CFPB’s Loan Originator Compensation Rule, updated in April 2016, closely examines the bureau’s regulation, contrasts its differences with previous regulation, and discusses important compliance and enforcement concerns. You’ll learn who is covered, what is allowed, what you must do to make your program fit within the rule, and what you need to continually monitor.
Know who is covered, what is allowed, and how to make your program fit within the rule.
Partial Table of ContentsThe CFPB’s LO Comp Rule
- Loans Subject to the Rule
- Definition of a Loan Originator
- Referrals
- Exclusions from the LO Comp Rule
- Dual Compensation, Upfront Points and Fees
- Proxies for Loan Terms
- Non-Loan-Term Items
- Profits-Based Compensation
- Pick-A-Pay Plans
- Pooled Compensation
- Compensation for LOs that Work as a Team
- Pricing Concessions
- Point Banks
- Competition for LOs
- SAFE Act Requirements
- Anti-Steering Provisions
- Record Retention
- QMs and Double Counting
- TRID Disclosures
Differences Between The Fed’s Rule and the CFPB’s Rule
- Single Transaction Versus Multiple Transactions
- Loan Originator Paying for Unanticipated Cost Increases
- Profit Sharing
Implementation and Enforcement of the CFPB’s Rule
- LO Qualifications
- Written Policies and Procedures
- Non-Cash Compensation Incentives
- Splitting Comp Between LOs
- Bonuses and Retirement Plans
- Bonuses Based on Volume
- Non-Producing Managers and Sales Executives
- Issues Related to the ATR Rule and QMs
- Investor Requirements
- Reverse Mortgages
- Bond Loans
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