Senate Tracking to Reform Mortgage Compensation

The Senate has approved approved sweeping legislation that will overhaul the mortgage industry if it stays on this path; Restoring American Financial Stability Act of 2010, S. 3172.

http://thomas.loc.gov/cgi-bin/query/D?c111:2:./temp/~c111vrqzLy::

While most mortgage types hope for changes before the bill becomes law, expectations by some believe the final bill will go the President in early July, 2010, but, changes will take 12-24 months to implement.
There are several major and I will update this blog on the other points later, but KEY points that affect LO compensation are as follows -

• Loan Compensation can not be based upon interest rate or product type
• Loan Compensation can be based upon loan size (basis points)
• Specific wording - “no loan originator shall receive from any person and no person shall pay to a loan originator, directly or indirectly, compensation that varies based on the terms of the loan (other than the amount of the principal).”
• YSP and Overages will go away
• Basis Points paid will be set for all loans originated for a period of time regardless of revenue generated
• Companies would set basis point levels
• Loan Officers can not be paid based upon terms of the transaction/loan type
• Loan Officers can not be paid based upon volume levels or loan quality (there is some confusion about this aspect because another statement mentions incentives for volume allowed)

So, we've been told this was coming around the bend and it looks like the trains on a straight track for now.

To that end.....