| Copyright 2011 First National Compliance Solutions Inc. |
| First National Compliance Solutions Inc. |
_________________________
LO Compensation Reading Page
The Loan Originator Compensation Rule can be one of the most complicated rules to comply
with and understand. Below is a list or Articles, Regulations and Publications that designed to
give you one place to read up on the subject.
Multistate Mortgage Committee (MMC) STATE NONDEPOSITORY EXAMINER
GUIDELINES FOR REGULATION Z – LOAN ORIGINATOR COMPENSATION RULE
This is a Guide for Examiners to Determine whether Regulated Mortgage Company's are
complying with the Federal Reserves Rule on LO Compensation.
The Federal Reserves Small Entity Compliance Guide. The guide summarizes and explains
rules adopted by the Board but is not a substitute for any rule itself.
Sandra F. Braunstein, Director, Division of Consumer and Community Affairs Mortgage
origination Testimony Before the Subcommittee on Insurance, Housing, and Community
Opportunity U.S. House of Representatives, Washington, D.C.July 13, 2011
Excerpt From her Testimony ".... for consumer-pay transactions, the final rule states that if the
consumer directly compensates a loan originator, compensation may not be paid to a loan
originator by any other person in connection with the transaction. This provision addresses
the problem that loan originators were frequently compensated by both the consumer and the
creditor in a manner that was not transparent to consumers and that could lead consumers to
believe, wrongly, that by paying a loan originator directly, the loan originator would work on
their behalf to find the most favorable loan. One consequence of this prohibition is that in
consumer-pay transactions, a mortgage brokerage firm that is paid directly by the consumer
may not pay a commission specific to that transaction to its loan officer.4 Because the
restriction only covers payments that are specific to the particular transaction, a brokerage
firm that is paid by the consumer directly can still provide its loan officers with incentive
compensation (in addition to salaries or hourly wages) without violating the rule. For example,
a brokerage firm could pay bonuses to loan officers who exceed a threshold number of loans
within a specified period.:
First National Compliance Solutions Article on Loan Officer Compensation. The article was
originally published in the National Mortgage Professional Magazine in June 2011 Issue.
Questions, Comments or Concerns? Please fill out the form below, call Jonathan Pinard at 1
800 400 4134 or email jp@fncsi.com
The Loan Originator Compensation Rule can be one of the most complicated rules to comply
with and understand. Below is a list or Articles, Regulations and Publications that designed to
give you one place to read up on the subject.
Multistate Mortgage Committee (MMC) STATE NONDEPOSITORY EXAMINER
GUIDELINES FOR REGULATION Z – LOAN ORIGINATOR COMPENSATION RULE
This is a Guide for Examiners to Determine whether Regulated Mortgage Company's are
complying with the Federal Reserves Rule on LO Compensation.
The Federal Reserves Small Entity Compliance Guide. The guide summarizes and explains
rules adopted by the Board but is not a substitute for any rule itself.
Sandra F. Braunstein, Director, Division of Consumer and Community Affairs Mortgage
origination Testimony Before the Subcommittee on Insurance, Housing, and Community
Opportunity U.S. House of Representatives, Washington, D.C.July 13, 2011
Excerpt From her Testimony ".... for consumer-pay transactions, the final rule states that if the
consumer directly compensates a loan originator, compensation may not be paid to a loan
originator by any other person in connection with the transaction. This provision addresses
the problem that loan originators were frequently compensated by both the consumer and the
creditor in a manner that was not transparent to consumers and that could lead consumers to
believe, wrongly, that by paying a loan originator directly, the loan originator would work on
their behalf to find the most favorable loan. One consequence of this prohibition is that in
consumer-pay transactions, a mortgage brokerage firm that is paid directly by the consumer
may not pay a commission specific to that transaction to its loan officer.4 Because the
restriction only covers payments that are specific to the particular transaction, a brokerage
firm that is paid by the consumer directly can still provide its loan officers with incentive
compensation (in addition to salaries or hourly wages) without violating the rule. For example,
a brokerage firm could pay bonuses to loan officers who exceed a threshold number of loans
within a specified period.:
First National Compliance Solutions Article on Loan Officer Compensation. The article was
originally published in the National Mortgage Professional Magazine in June 2011 Issue.
Questions, Comments or Concerns? Please fill out the form below, call Jonathan Pinard at 1
800 400 4134 or email jp@fncsi.com