CFPB compensation call 'one less reason to be a broker'

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The Consumer Financial Protection Bureau’s decision not to amend loan origination compensation calculation for brokers gives them “one less reason to be a broker,” an industry executive has said.   
 
The CFPB made several amendments to the ability-to-pay rule last week, including one that will allow loan origination compensation to be excluded from the 3% points and fees cap. The new calculation applies to loan origination employees, but not brokers, according to the CFPB.
 
For loan officers working for a direct lender, this is an advantage, said Bill Bent, executive vice president of production of Academy Mortgage. But for a broker, the rule doesn’t change that he must include his origination compensation in the 3% points and fees calculation, putting him at a disadvantage to those working for direct lenders, he said. 
 
Still, the loan origination compensation calculation amendment is an overall positive to the mortgage industry, Bent said.  
 
Under new regulations and compliance, the broker model has been difficult to uphold, said Andy Sandkamp of Nationstar Mortgage. 
 
Along with the loan origination compensation rule amendment, the CFPB announced Wednesday several others to the ability-to-pay rule. Amendments included an exemption to the ability-to-repay rule for smaller creditors (those under US$ 2bn in assets and 500 yearly loan originations) and an exemption for non-profit lenders, such as some types of credit unions that lend to low-to-medium income borrowers.
  • Viva la Revolucion on 6/4/2013 10:06:56 AM

    So much for a free market economy; truly disgusting what is coming out of DC, and sickening to watch people just lay down and take it.

  • Griff on 6/4/2013 10:30:32 AM

    So, good to know brokers are a recipe for disaster. I wonder what my $330K refi would think about that since I SAVED them over $4000 from what the Bank would have charged! CFPB is working hard to keep all the money at the bank and transparency away from the borrower.

  • Viva la Revolucion on 6/4/2013 11:10:55 AM

    Griff - not only are they working to keep all the money at the bank, the CFPB is working to close out the individual and small brokers. Your hard earned tax dollars at work to put yourself out of business.

  • Village Rebel on 6/4/2013 11:19:45 AM

    The parties that favor government controlled systems curiously end up supporting old money, the old order and end up stifling innovation to the detriment of all (eventually)...just look at what's happened in Europe: FRANCE, Greece etc...where old money RULES and pays little to no tax...and entrepreneurship is DEAD...

  • Michael G. Burroughs on 6/4/2013 12:09:12 PM

    We recently experienced long lines at the airports. Complaints caused Congress to take quick action.
    It seems to me that the value of a Mortgage Broker is many fold, but perhaps the best value is picking the right product and the right Investor at the right time and delivering on time as that's when he gets paid. Sending deals to any bank gives the borrower one choice and hence may cause complaints where the light bulb would go on at the CFPB and real
    changes in the future would bring real value to the consumer through competition. In my 48 years of originating loans each year we have less competition and BIG banks with BIG policies tend to cause the consumer to pay more in the end. It's sort like you only hurt the ones you love, the ones you should hurt at all. If the CFPB means well, maybe they will flush out all competition and our government will Nationize all banks some day and then the consumer will have no choices.

  • Eric Meehan on 6/6/2013 10:51:58 AM

    Why and how do these policies keep getting implemented? Isn't it obvious that it is "All about the Money" and what the banks pay so that these rules keep getting made? How in the world can you make a rule that favors one entity over another? How??? What could possibly be the reason for this other than the money the banks have and the continued power they weild? Is amyone really listening and seeing what is happening? Hello, Consumer, WAKE UP!

  • John Councilman on 6/4/2013 10:05:15 AM

    So the people who want to make more than 3% will go to work for banks and bankers. That will do wonders for that channel's reputation not to mention the likelihood of gouging. No wonder CFPB's mortgage complaint site is mostly against banks and virtually devoid of broker complaints.

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