CFPB Chief: Loan Origination Compensation Rule Could Change by 2013

Changes to the Federal Reserve Board’s controversial loan originator compensation rule will likely be made by January 2013, according to statements made today by Richard Cordray, chief of the Consumer Financial Protection Bureau, which now has authority over the rule.

The changes are likely to allow originators to lower their compensation in order to close a home purchase, HousingWire reported following a congressional hearing Thursday.

Cordray, speaking before a House Financial Services Committee panel, said changes to the rule should be in place by 2013 and that the bureau has the ability to adjust the rule, according to the report.

Advertisement

A bill introduced by Rep. Gary Miller (R-Calif.) would allow a loan originator to reduce his or her compensation by up to 30% in order to reduce closing costs to the borrower. Under the current rule, originators are unable to absorb those costs.

Rep. Miller. speaking at the Thursday hearing said the bill would not allow originators to raise costs at the last minute.

“Would your bureau take these ideas into consideration?” he asked Cordray, according to the HousingWire report.

“On its face, it sounds fairly sensible I would say,” Cordray said.

Earlier this week, the bureau’s head of mortgage markets spoke of plans to reexamine the rule and issue a new proposal.

Read the original article.

Written by Elizabeth Ecker

Join the Conversation (5)

see all

This is a professional community. Please use discretion when posting a comment.

  • Perhaps these legislators and officials, who have been concentrating on the negative effects caused by the acts of a few bad apples within the mortgage industry ( most of whom are no longer in the business)and how to protect their constituents from fraud and abuse, find it difficult to believe that there are actually caring, sympathetic loan originators out there who are more than willing to help their borrowers remain in their homes by reducing their compensation so that the borrower can qualify for the loan that will fulfill their financial objective. I believe that this attitude is shared by the majority of face-to-face “kitchen table”originators,especially in the Reverse industry, but, quite frankly, question whether it exists in the world of call center origination where that personal relationship is more difficult to build and, where I have noticed, it is more about the transaction than the senior. In either case, this decision should be one left to the originator and not a regulator. 

  • Well said,
    It time regulators stop beating to death loan originators, the bad ones are gone. There are many LO’s who are committed to this business.
    I have done 100’s of reverse mortgages  (face to face) and their was not one, where the senior and their family weren’t happy. It is great for many different situations a senior might have.
    The call center growth is worrisome to me also. This is such a private and personal program for seniors and doing a FA with them is a good thing. However, as the next generation of retirees come into place, they are comfortable doing financial tranactions over the phone and on the internet.

  • Well said,
    It time regulators stop beating to death loan originators, the bad ones are gone. There are many LO’s who are committed to this business.
    I have done 100’s of reverse mortgages  (face to face) and their was not one, where the senior and their family weren’t happy. It is great for many different situations a senior might have.
    The call center growth is worrisome to me also. This is such a private and personal program for seniors and doing a FA with them is a good thing. However, as the next generation of retirees come into place, they are comfortable doing financial tranactions over the phone and on the internet.

  • When they talk about compensation, they are talking about the kind that the borrower pays not the ysp compensation, correct? In our case almost every fixed rate is $0 origination. Most people in our company who do adj rate HECMs are ones with little to no mortgage so reducing origination fees aren’t possible because then we’d be practically pro bono.

    If they are saying that we can pay down costs with our back end money, I’m all for that – when we used to be able to do that, it was always a win-win. We helped a lot of homeowners qualify that wouldn’t have otherwise because they were a couple of thousand off and we still made money.

string(111) "https://reversemortgagedaily.com/2012/03/29/cfpb-chief-loan-origination-compensation-rule-could-change-by-2013/"

Share your opinion