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Tuesday, April 3, 2012

CFPB Issues Guidance on Loan Officer Compensation

According to a CFPB bulletin the Federal Reserve’s mortgage loan originator compensation rules permit employers to contribute to qualified profit-sharing, 401(k), and employee stock-ownership plans out of a profit pool derived from loan originations.

The guidance is welcomed by the industry but ambiguous elements still remain in the mortgage loan originator compensation rules.
For example, the commentary language providing that compensation may not be based on a factor that is “a proxy for” a loan’s term or condition should be more precise.

The CFPB has promised to address such issues in a proposed rule on the Dodd-Frank Act’s loan origination compensation provisions that ABA expects the bureau to issue in this year’s second or third quarter.

Read the bulletin.

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