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Does your compensation pass regulatory muster? It depends

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Mortgage Professional America | 29 May 2013, 05:00 AM Agree 0
Regulators will use their own discretion to decide if mortgage originators are following compensation requirements, according to one industry expert
  • James Thomas | | 29 May 2013, 09:38 AM Agree 0
    The Police and Fire Retitment System has a progam in NJ for members. They provide a low interest rate mortgage for members but the mortgages have to be originated by Mortgage companies. The Retirement system pays the lender $1500. per mortgage. Unfortunatley because of the mortgage office compensation rules we can no longer offer because we would be paying the Loan Officer most if not all or more than we earn.

    Unintended consequenses of the rules
  • Discretion to Decide? | | 29 May 2013, 12:20 PM Agree 0
    …"regulators have discretion to decide”. This is wrong. There should be no ambiguity in the law allowing regulators the 'flexibility' to interpret the ‘law’ on the spot. They are not Judges.

    Besides the lack of data showing the need or benefit of Loan officer Compensation, the logic of it is faulty. The focus should be on the benefit the consumer receives, not the LO’s compensation. Fixed comp drives originators to the easiest (higher priced) lenders, not to the best rate lender (more difficult) because there is no reward. In addition, without higher compensation for difficult mortgages these are being denied. In both cases the consumer loses.

    If a Loan officer gets paid more for self-generated business from the rich part of town part of town with bigger mortgages, will this result in disparate impact? It will take more documentation to prove otherwise. Obviously Lawyers are working hard to create all this stuff.
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