CFPB Mortgage Loan Originator Compensation and Audit Requirements under the SAFE Act 

On Jan. 20, the CFPB issued its final rule on the Mortgage Loan Originator Compensation Rule under the Truth in Lending Act.

Part 1007.102 of the SAFE Mortgage Licensing Act defines a mortgage loan originator as an individual who takes a residential mortgage loan application and offers or negotiates terms of a residential mortgage loan for compensation or gain.

The CFPB’s final rule presents four key prohibitions regarding MLO compensation.

Prohibition on steering incentives: A MLO cannot be paid more if the consumer takes a loan with a higher interest rate, a pre-payment penalty or higher fees. The MLO cannot be paid more if, for example, the consumer agrees to buy title insurance from an affiliate of the credit union.

Prohibition on compensation based on a proxy for a term of a transaction: The final rule clarifies the definition of proxy as:


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