Originator Compensation Delay Dissolved. New Rules in Effect

by devteam April 7th, 2011 | Share

BAD NEWS:  A decision has been made. The loan originator compensation delay has been dissolved. New compensation plans are now in effect.</p

From the Court Order…</p

“Upon consideration of the emergency motion for expedited relief and the emergency motion to stay implementation of final rule pending appeal, the response thereto, and the reply, it is ORDERED that the administrative stay entered on March 31, 2011, be dissolved. It is FURTHER ORDERED that the motions be denied. Appellants have not satisfied the stringent standards required for a stay pending appeal. See Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977); D.C. Circuit Handbook of Practice and Internal Procedures 32 (2010).”</p


April 5, 2011 5:55pm</h3

</div<pIt is MND's opinion that originator compensation reform should be delayed at least until the Consumer Financial Protection Bureau is fullyrn up and running in July.From Originator Compensation: Putting the Cart Before the Horse:rn “By limiting the consumer’s choice of originator compensation methods to either rebate through a premium note rate or paying points to buydownrn the note rate, we are also limiting their “best execution” financing options. This would imply, based on the segmented nature of the mortgagern market, that some consumers might end up paying more than they would have for the same note rate before these regs were implemented (no lender prices the same as another). Then again, the final rules clearly prohibit a mortgage broker or loan officer from “steering” a consumer torn a lender offering less favorable terms in order to increase the broker’s or loan officer’s compensation. Yikes. I’m not sure how that rule will be monitored or enforced from the perspective of the consumer’s most efficient buydown structure. If there is no rebate standard/originator commission standard, then how do we regulate the industry? I believe we need a better definition of what constitutes steering a consumer away from an expensive buydown (good) vs. steering arn consumer toward a higher rate just to increase commission (bad)”</p


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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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