In New Meetings with CFPB, Mortgage Lenders Find More Questions than Answers

Mortgage industry representatives have been meeting with CFPB officials to talk about uncertainties and concerns regarding the CFPB’s plans to establish new loan originator compensation rules. This week, through two conference calls, 19 mortgage representatives met with the agency in an effort to get some answers. But what they found instead were more questions.

“I compliment them for reaching out to the small business community,” said National Association of Mortgage Brokers (NAMB) board member Mike Anderson on an association conference call titled Will the CFPB’s Proposed Rules Destroy the Mortgage Industry?

However, Anderson said, there is still widespread confusion among mortgage professionals with more questions than answers.


During a day-long meeting held in May, the group covered the topic of loan officer compensation, which led to two follow up calls held this week for clarification.

“There was even more confusion after that,” Anderson said. “We couldn’t get the questions answered…. we all need to be extremely concerned because this [could be] a stepping stone to the next plateau.”

The main question comes down to points and fees charged by originators, a change which remains unclear from a reverse mortgage compensation standpoint, as reverse mortgage compensation is set by the statue and based on the loan amount. The Bureau can create exemptions to its “points and fees” provision if it finds an action is not in the consumer’s best interest.

The CFPB said during the meetings that it must make some change to the current compensation plans by January 21, 2013, or there will be no fees allowed at all for mortgage originations, as mandated by the Dodd-Frank Act.

“When asked if they were doing studies regarding LO comp, they said all of their studies predated LO comp,” said Valerie Saunders of RE Financial Services. “Why are they doing it now? Because we have a ticking time bomb. Something has to happen by January 21 of 2013 or the ability to charge points, fees and discount points is going to go away.

Written by Elizabeth Ecker

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  • There is an old joke which tells of a farmer who goes to his attorney for direction on how to handle a legal situation.  After becoming confused with contradictory statements of “on one hand” and “but then on the other hand,” the bewildered farmer cried out:  “I wish you would use just one hand when you speak.”

    How someone with a pure legal background (other than time on Jeopardy) is supposed to address the practical questions of mortgagees is simply unreasonable.  However, it is certainly better than the Bureau being run by the self proclaimed Cherokee law professor who invented the Bureau and oversaw Bureau management hiring. 

    Ah, the CFPB is turning out just as expected.  While it may not outright destroy the mortgage industry as a direct act, its meddling and indecision may result in exactly the same thing. 

    Congratulations to you, Professor Warren, for a job well done.  (FCOL)  Let us hope you do not elected to the Senate.  Both we and you need a rest from all of your “good” deeds in the legislative arena.

  • LO Compensation and CFPB. Maybe we should ask the sponsors of Dodd Frank and the people who actually wrote the provisions regarding LO compensation to find out just exactly what their intentions were rather than allowing a bunch of rank, financially unsavvy bureaucrats and government functionaries try in vain to divine the intent of the Bill’s sponsors.
    Trying to interpret poorly crafted, hastily written and inadequately debated emotionally based legislation is a waste of time and an embarrassment to all involved.

  • I wish the comments on this forum would not be of a direct political nature. It distracts from the issues at hand and stifles productive conversation. 

    • ReverseGal2,

      Please set the example.

      If Dodd-Frank is not political, what is it?  HERA is not known for being political; neither is the Housing Act.  But the same cannot be said for Dodd-Frank.

      As to the CFPB, it has been shrouded in politics from the day of its inception by Professor Warren.  Of course the current antics of the Professor only further clouds the actual purpose of the CFPB.

      While there is a high road on other acts impacting HECMs and the mortgage industry, the Democratic political machine never allowed that to occur when it came to Dodd-Frank or the CFPB.

      •  Critic,

        You are 100% right! This is political as it get’s.

        John Smaldone

  • The Dodd-Frank bill and the CFPB continue to haunt us, Why, because of the hidden mandates and lack of understanding by the financial community in just how dangerous and camouflaged the bill actually is.

    The bill I am referring to is “The Financial Regulatory Reform Bill” (Dodd-Frank). Out of this bill came the CFPB along with enormous powers.

    Things like the mandate that Something has to happen by January 21 of 2013 or the ability to charge points, fees and discount points will not be allowed at all for mortgage originators

    .Fear is spreading, now it will spread even more. Many originators and companies were not aware of the hidden madate of January 21st 2013. Great situation we have been put into my friends!

    John A. Smaldone

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