Those in our business are likely following the Mortgage Bankers Association’s (MBA) request that the Consumer Financial Protection Bureau (CFPB) make changes to its Loan Originator Compensation rule, citing the benefit to consumer and reduction of regulatory burdens. Back in October, MBA member companies signed a letter to Acting Bureau Director Mick Mulvaney, urging that changes to the LO Comp rule should be his “top priority.”
Our firm stands strongly behind the request and the wording in the MBA’s letter to Director Mulvaney:
“”The LO Comp rule causes serious problems for industry and consumers due to its inflexible prohibitions on adjusting compensation and its amorphous definition for what constitutes a proxy for a loan’s term or conditions,” the MBA-sponsored letter said. “The rule harms the efficiency of the mortgage loan market by limiting lenders’ ability to compete and consumers’ ability to shop.”
Further, we agree with the MBA’s position that LO Comp rules should “provide the appropriate guidance” to help lenders comply with the law via three key changes:
- Permit loan officers to voluntarily reduce their compensation to better compete, benefiting both lenders who can compete for more loans and consumers who’ll receive a lower cost loan.
- Allow compensation reductions due to originator error, to reduce errors and encourage compliance, and ensuring a more transparent market for consumers.
- Allow variable compensation for HFA program loans, benefiting first-time and low- to moderate-income home buyers.
You can count on BM&G to keep you posted on this and other timely industry news in our newsletter, our website, and on social media channels.