The Consumer Financial Protection Bureau has long been developing loan originator compensation rules, the final form of which will be released this week according to reports published Thursday.
Citing “an industry official who was briefed on the matter,” Inside Mortgage Finance reported Thursday that the rule is slated to be published be end of day Friday.
The agency has issued proposed rules on loan originator compensation, as mandated under Dodd Frank, a responsibility passed on to the CFPB by the Federal Reserve Board, which formerly governed LO comp rules.
Initial concerns regarding the rule included a stipulation that originators cannot be compensated both by the borrower and by the lender.
Additional changes included requiring lender to make a no-point, no-fee loan option available, requiring an interest rate reduction when consumers elect to pay upfront points or fees, and implementing additional requirements for loan originators in terms of background checks, training and steering.
For reverse mortgages, the bureau clarified interpretation of “amount of credit extended” as it related to compensation. The CFPB specifies the “initial principal limit” rather than the “max claim amount” is the interpretation to be used.
The final rule is expected to consider industry feedback and comments based on the proposed rule, issued in August.
Written by Elizabeth Ecker