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ARTICLE · 22 JUNE 2015

Loan Originator Compensation: CFPB Grabs The "Steering" Wheel

Bradley Arant Boult Cummings LLP
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The CFPB took action against two mortgage companies for violations of the Loan Originator Compensation Rule ("LO Comp Rule")...

United StatesFinance and Banking
J. David Dresher
J. David Dresher
Heather Hutchings
Heather Hutchings
Lesley DeRamus
Lesley DeRamus

The CFPB took action against two mortgage companies for violations of the Loan Originator Compensation Rule ("LO Comp Rule"), which prohibits compensation to loan originators based on loan terms, claiming that the companies' compensation structures encouraged loan originators to "steer" consumers into costlier mortgages. In each case, the CFPB also held individuals involved in the management or ownership of the mortgage companies (the CEO of one company, and the owners of the other) responsible for making certain payments. Each of these cases involved a finding by the CFPB that although the compensation systems may not have directly compensated officers for steering, the arrangements were essentially disguised means by which the loan originators could be paid higher compensation based on the profitability of their loans.

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