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ARTICLE · 22 SEPTEMBER 2023

CFPB Adjusts Long Time Position Relating To Loan Originator Compensation

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Many residential mortgage lenders currently have loan compensation plans that provide for a payment to loan originators of one commission amount for loans funded by the lender...

United StatesFinance and Banking
Moorari K. Shah
Moorari K. Shah
A.J. Dhaliwal
A.J. Dhaliwal
Sherwin Root
Sherwin Root
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Many residential mortgage lenders currently have loan compensation plans that provide for a payment to loan originators of one commission amount for loans funded by the lender, and a smaller commission amount for loans that are brokered out to other lenders. While the CFPB never directly endorsed this result, they did not reject it either. In its Loan Originator Compensation Rule Resource Guide, the Mortgage Bankers Association provided the following illustration and comment when discussing the Loan Originator Compensation Rule's prohibition against compensation based on a proxy for a term of a transaction:

A mortgage company generally acts as a creditor, but if a customer wants a loan product that the company does not make, the company will broker the loan to a creditor that offers the product . . . [e]ach employee loan originator may handle both brokered loans and loans made by the company. An employee loan originator will receive a

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