Tag Archives: loan officer compensation

Clarification of Mortgage Rules Comes From CFPB

20 Sep

The Consumer Financial Protection Bureau (CFPB) this month finalized amendments and clarifications to its January 2013 mortgage rules to help the industry comply and to better protect consumers.

In January of this year the CFPB introduced the Ability-to-Repay rule, requiring lenders to make a “reasonable, good-faith determination” that prospective borrowers have the ability to repay their loans.


On June 24, 2013, the CFPB proposed several amendments and clarifications to the mortgage rules adopted in the final rule, which is intended to clarify interpretive issues and facilitate compliance. One of the Bureau’s modifications is to clarify what servicer actives are prohibited in the first 120 days of delinquency. This rule prohibits servicers from making the “first notice or filing” under state law during the first 120 days a borrower is delinquent.


Under the rule, servicers will be allowed to send certain early delinquency notices required under state law to borrowers that may provide beneficial information about legal aid, counseling or other resources.


Another rule the CFPB aims to clarify is the definition of a loan originator.  Under the CFPB’s new rules, persons classified as loan originators are required to meet qualification requirements and are also subject to certain restrictions on compensation practices.


The provisions of the CFPB’s loan originator compensation rules that have not yet gone into effect were scheduled to take effect on January 10, 2014.  The  CFPB has changed the effective date for certain provisions of the rule to January 1, 2014.

“Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace,” said CFPB Director Richard Cordray. “Today’s rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers.”

Proposed LO Compensation?

31 May

from National Mortgage News MAY 25, 2012 by Paul Muolo

CFPB to Industry: Here’s the Compensation Proposal. Tough Luck

Roughly 18 representatives of the residential lending industry sat around a table this past Wednesday at the Treasury Department in Washington with various members of the Consumer Financial Protection Bureau. According to those in attendance, the messages delivered by the CFPB were loud and clear: (*)Flat fee compensation is a done deal. Deal with it. (*)CFPB wants licensing and regulatory parity for banks and nonbanks alike. (*)If you have payments made to affiliates your life will be more complicated and difficult. (*)The CFPB doesn’t care that its mortgage compensation proposal will destroy the lending industry and hand the business over to the nation’s largest banks…

A few other notes about the meeting: no representatives from trade organizations were allowed to sit at the U-shaped table with the CFPB officials. Trade reps were relegated to the audience. Trade groups, however, were permitted to submit the names of five people who would sit at the table. CFPB chief Richard Cordray was not there in person and instead phoned it in and then departed after five or ten minutes. Another CFPB forum for large banks and wholesalers was being held down in North Carolina, Go figure…

Of course, all the sentiments you read in this blog might be exaggerated. Believe what you want. Talk to people who were there. Next week National Mortgage News will be writing more about the meeting. Maybe it will all turn out rosy in the end…

Have any more insights on the meeting? Drop me a line at: Paul.Muolo@SourceMedia.com

Oh, and one another thing: mortgage bankers are being told to get ready for CFPB examinations of their shops. Here’s the good news: the big banks get audited first for mortgage compliance. Then the agency will get around to everyone else. If your firm is listed on the NMLS you will face an audit at some time in your lifetime. If you have a phone, you have a lawyer…

As for who we can blame for this potential nightmare: the list is long but starts on Wall Street and shoots out to Orange County, Calif., where mortgage geniuses the likes of Roland Arnall and others plied their trade during the go-go years and said President (George W.) Bush forced them to make loans to poor people as part of the ‘Great Ownership Society.’ For the complete list read “Chain of Blame…”

If you want to fight the power (the CFPB/Dodd-Frank) check out this petition: http://www.change.org/petitions/petition-to-amend-the-dodd-frank-act

MORTGAGE DATA STUFF: There are $9.1 trillion of outstanding home mortgages (servicing rights) in the U.S. Don’t believe the other general media. If you need complete channel breakdowns, top wholesalers, correspondent, servicers and much more order the Quarterly Data Report and/or MortgageStats.com. Discounts are available to National Mortgage News advertisers. For more info, email: Deartra.Todd@SourceMedia.com.

MORTGAGE PEOPLE: Ken Ferrari recently left Carrington Mortgage Services where he served as vice president, Eastern division. One source said his job was eliminated as part of a restructuring.

READING MATTER: When will REITs start buying MSRs? See the Monday paper edition of National Mortgage News. Don’t subscribe? Call: (800)221-1809. A paid sub gets you all of our web content totally free…

Reactions to LO Compensation Changes

13 May

One Month Post-LO Comp Changes, Industry Reacts
Reverse Mortgade Daily – May 5th, 2011  | by Elizabeth Ecker
With the implementation of the Federal Reserve Board’s new loan officer compensation rules now one month behind us, we decided to see how the reverse mortgage industry is adapting to the changes. It may be too soon to tell for some, but others are definitely seeing the impact on their business.

We asked several reverse mortgage professionals to respond to the question:
One month after implementation of the Loan Officer Compensation Rule, how is your business faring?*

Here’s what they had to say.
“Operating as a broker, we were previously able to offer homeowners a lower cost HECM than many providers because we could pick up some borrowers’ costs in many cases. But the new compensation regulations have eliminated our ability to do this. How this aspect of the new regulations makes sense, I have no idea.”

—Lance Jackson, President & CEO, Castle Financial – Reverse Mortgage Experts

“Our loan officer compensation plan is getting redone right now for the second time. The first time we thought we had it all laid out, but there have been compliance issues. We’ve gone from four pages to 11 pages. It has been the biggest thorn and nobody’s 100% crystal clear on it. I cannot tell you the amount of energy and effort that have gone into this. It should have been done on a smarter level collectively, for some of the smaller industry players. We all should have gotten together collectively and had somebody on the job to get the guidelines, verbiage and interpretation together.”

—Ron Kamler, President, California Reverse Mortgage Consultants

“Like all companies, we’ve had to make significant adjustments to our compensation plans, but I have not seen any negative feedback as it pertains to the retail production side. The impact is going to be more visible on the wholesale side.”

—Sarah Hulbert, Retail Business Development Manager, 1st Reverse Mortgage USA

“We’ve spoken with several originators across the U.S. regarding the Loan Officer Compensation Rule. What we’ve heard is compensation to individual loan officers has not been significantly impacted in a negative way as many had anticipated. It appears the real changes have taken place behind the scenes with lenders revising their compensation plans to be compliant with the rule. I would be surprised if we hear from our members with reports of decreased commissions or a drastic reduction in overall production due to the new rule alone—market forces are challenging enough and it is expected that a substantial change in compensation for mortgage professionals at such a time would be met with skepticism.”

—Shannon Hicks, VP of Product Development, Reverse Fortunes

Visit www.ReversrMortgageDaily.com to see all the comments in the lively discussion that followed.

New LO Compensation Here To Stay?

8 Apr

Loan Originators have known for months that it was imminent:  compensation was no longer going to be paid in the same way.  For years they have been paid by the borrower in the form of an origination fee “up front” and by the bank in the form of yield spread premium “on the back”.  No longer, on products where back end premiums were fat.

The purpose of the Federal Reserve Board’s new rule was to “protect” consumers from fees which are tied to the rate offered.  To put it very simply, by removing back end premiums and by ruling that loan originators can no longer pay some of the closing costs for the borrower, the Fed has taken away the loan originator’s competitive edge.  The consumer can no longer benefit from discounts that drive competition between lenders.

The National Association of Mortgage Brokers (NAMB) has taken steps to fight the Fed on this new rule.  A stay on the April first implementation of the new rule lasted only five days, however.  The United States Court of Appeals ruled against the stay and appellate judges lifted the stay.  The new LO compensation rule is now in effect but the NAMB is committed to continuing the appeal.

“NAMB will continue to fight for its members, our industry, and ultimately, the consumer,” said NAMB President Mike D’Alonzo. “The voice of the mortgage industry needs to be heard and we vow to make sure that happens! We thank everyone for their continued support.”

See the NAMB press release here: http://www.namb.org/namb/NewsBot.asp?MODE=VIEW&ID=296&SnID=933537982