CFPB Meets with Fed, Industry On Loan Officer Compensation and Audit Plans

Consumer Financial Protection Bureau officials met last week with Treasury Department representatives on the topic of loan originator compensation. Those in attendance reported that the CFPB’s flat-fee compensation plans are a “done deal,” and National Mortgage News’ Paul Muolo summed it up late last week: 

Roughly 18 representatives of the residential lending industry sat around a table this past Wednesday at the Treasury Department in Washington with various members of the Consumer Financial Protection Bureau. According to those in attendance, the messages delivered by the CFPB were loud and clear: (*)Flat fee compensation is a done deal. Deal with it. (*)CFPB wants licensing and regulatory parity for banks and nonbanks alike. (*)If you have payments made to affiliates your life will be more complicated and difficult. (*)The CFPB doesn’t care that its mortgage compensation proposal will destroy the lending industry and hand the business over to the nation’s largest banks…

A few other notes about the meeting: no representatives from trade organizations were allowed to sit at the U-shaped table with the CFPB officials. Trade reps were relegated to the audience. Trade groups, however, were permitted to submit the names of five people who would sit at the table. CFPB chief Richard Cordray was not there in person and instead phoned it in and then departed after five or ten minutes. Another CFPB forum for large banks and wholesalers was being held down in North Carolina, Go figure…

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Read the rest of Muolo’s recap

Written by Elizabeth Ecker

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  • When attorneys and auditors at a non-supervised regulator are allowed free rein to regulate an industry, well, this is the result.  How this is fair to small borrowers needs to be explained.  As usual Democrats manage to protect the interests of the most affluent placing it on the backs of the less affluent.  Don’t ya just love Elizabeth Warren (aka Elizabeth Herring Warren Mann).

    Ah, the joys of Dodd-Frank.  (COL, as in cry out loud).   

  • As brokers, we have only one choice facing us, use your vote this November and get help get rid of those in Washington who know whats best for the poor consumer. Only vote for those who pledge to abolish Dodd-Frank and the CFPB. Its either that or the broker will be a thing of the past. 

  • This is the worst news possible. The objective is to destroy the small to medium size businesses in this country. The objective of the CFPB and the feds is to reduce drastically the playing field. By doing so the large and powerful shall survive.

    I am sorry to be so bold but what we are seeing is what I said would happen two years ago when the passage of the Financial Regulatory Reform Bill (Dodd-Frank) and the creation of the CFPB occurred. This is and was a major move toward socialism!

    My colleagues, we are seeing this happening right before our eyes. We could be experiencing the demise of our careers as we know it to be. We must, through NRMLA, AARP or any other means available to us, stop this in its tracks!

    I will make myself available to help in any way I can to stop this before it becomes effective. If anyone out there reading this comment of mine has the power to form a lobbyist group against this action, please call on me!

    Thank you,

    John A. Smaldone
    http://www.hanover-financial.com

  • [REPLY TO;
    John Smaldone]

     

    Over the
    past decade, mortgages have become commodities (as well they should be). As
    commoditization occurs, the value of the loan officer has diminished to that of
    an order taker. There are still very few “specialists” out there who really understand
    the nuances of the products and really fight for the borrower’s best interest.
    The bulk of the transactions are increasingly done through electronic means (internet/call
    center) and as such, the knowledgebase of the LO is mitigated by computer simulation
    software running multiple scenarios against multiple lenders which renders an
    analysis placing the borrower in the best product (price/rate wise).

     

    The “flat
    fee” is the next logical step in the industry’s evolution. In this evolution,
    the mom and pops brokerage will be eliminated over time leaving loan production
    where it should be, with banks that can accommodate the ever changing interpersonal
    communication and regulatory landscape. This naturally lends itself to larger
    operations with the resources to adapt their operations to fit the topology.

     

    The only
    thing consistent is change. Embrace it and you will succeed. Fight it and you
    will lose every time. 

  • [REPLY TO;
    John Smaldone]

     

    Over the
    past decade, mortgages have become commodities (as well they should be). As
    commoditization occurs, the value of the loan officer has diminished to that of
    an order taker. There are still very few “specialists” out there who really understand
    the nuances of the products and really fight for the borrower’s best interest.
    The bulk of the transactions are increasingly done through electronic means (internet/call
    center) and as such, the knowledgebase of the LO is mitigated by computer simulation
    software running multiple scenarios against multiple lenders which renders an
    analysis placing the borrower in the best product (price/rate wise).

     

    The “flat
    fee” is the next logical step in the industry’s evolution. In this evolution,
    the mom and pops brokerage will be eliminated over time leaving loan production
    where it should be, with banks that can accommodate the ever changing interpersonal
    communication and regulatory landscape. This naturally lends itself to larger
    operations with the resources to adapt their operations to fit the topology.

     

    The only
    thing consistent is change. Embrace it and you will succeed. Fight it and you
    will lose every time. 

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