In an interesting shift, the Consumer Financial Protection Bureau (CFPB) seems to be realigning its long-standing position on loan originator compensation.
As reported, many residential mortgage lenders at present, have compensation structures that provide for a payout to loan originator in the form of a single commission amount for loans financed by the lender, and a diminished commission amount for loans brokered out to other lenders. Though the CFPB has not given a direct endorsement of this system, they have not denounced it either.
This apparent neutrality to the setup has been interpreted by many as tacit approval by industry professionals, considering the lack of opposition or regulation against it by the CFPB. In particular, the legal firm Sheppard Mullin Richter & Hampton LLP provided commentary on the situation.
However, it seems that the status quo might be in for a shake up. It stands to be seen exactly what kind of changes the CFPB is considering, whether a complete overhaul of the system or slight alterations to the existing arrangements.
Whatever the changes may be, they are sure to have significant implications for loan originators and mortgage lenders, affecting compensation plans and potential earnings. As such, industry professionals are keenly awaiting official announcements and detailed policies from the CFPB. We will continue to report on this significant regulatory change as it unfolds.