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.
COMMENTS
  • 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.

  • 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.

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