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Loan Originator Compensation

Amendment Effective January 1, 2014/ January 10, 2014 the Loan Originator Compensation rule generally regulates how compensation is paid to a loan originator in most closed-end mortgage transactions. The rule also imposes qualification duties on loan originators under the SAFE Act or other state or federal law. The rule also implements two other provisions of the Dodd-Frank Act that apply to most closed-end mortgage loans and to Home Equity Line Of Credit (HELOC)' s secured by the consumer’s principal dwelling; the prohibition of mandatory arbitration clauses in contracts and the prohibition of financing of credit insurance premiums of fees. 

Prohibited Compensation

  • Mortgage Loan Officer (MLO) cannot receive compensation on any of the mortgage loans’ terms or conditions of proxy for any loan term or condition.
  • No dual compensation – If the MLO receives compensation from the borrower in connection with their mortgage loan, s/he cannot receive compensation from their organization or another person for the same transaction.

Financing of Single Premium Credit Insurance

  • Applies to closed-end consumer credit transactions secured by a dwelling and open end loans secured by the member’s principal dwelling.
  • Prohibits the financing of any premium, excluding premiums that are calculated and paid-in-full on a monthly basis.
  • “Financing” is the right to defer payment of a credit insurance premium owned by the consumer beyond the monthly period in which the premium is due. 

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CFPB MLO Compensation
 

CFPB Loan Originator Compensation

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