Alert April 03, 2012

The CFPB Issues Guidance on Mortgage Loan Origination Compensation Rules Under Regulation Z

In response to several inquiries regarding the FRB’s mortgage loan originator compensation rules, the CFPB issued a guidance bulletin stating that compensation rules under Regulation Z permit employers to contribute to profit-sharing, 401(k), and employee stock-ownership plans out of a profit pool derived from loan originations. The compensation rules promulgated by the FRB in September 2010 provide that no loan origination may receive, directly or indirectly, compensation that is based on any terms or conditions of a mortgage transaction.

The CFPB also noted that it anticipates in the near future issuing a proposed rule on the loan origination provisions under Section 1403 of the Dodd Frank Act, which addresses loan originator compensation.  Click here for the bulletin.