From Bloomberg.Com
By Joshua Zumbrun - Aug 16, 2010 10:50 AM CT
The Federal Reserve announced rules aimed at preventing mortgage originators from receiving more compensation for selling home loans with higher interest rates.
“A loan originator may not receive compensation that is based on the interest rate or other loan terms,” the Fed said today. “This will prevent loan originators from increasing their own compensation by raising the consumers’ loan costs,” the Fed said as part of five final, interim or proposed rules released in Washington to combat unfair or abusive lending. Read more @ Bloomberg
Read details @ Board of Governors of the Federal Reserve System
How this plays out for everyone's income, including the gross compensation at the company level remains to be seen. This combined with FHA's elimination of a broker's need to be approved to do FHA loans will have a dramatic impact on the compensation models and business strategies of loan officers and company owners alike.
I'd enjoy comments, questions and discussions along these lines.
2 comments:
Do you see this new Fed rule as leveling the playing field between brokers and bankers?
Also, did you see the clause that talked about originators that receive compensation directly from the borrower would not also be able to receive compensation directly from the lender or other third-party?
Defnitely some interesting times ahead.
Great question. Leveling the playing field? That is an interesting concept, though I haven't considering the Fed Rule doing that. Or, not by itself.
But combined with the elimination of the broker's need to be approved by HUD to originate FHA loans, that is going to change some things and "leveling the playing field" is a possiblity. It depends on what we meand by leveling though. Loans are still going to close in bankers name and fees are still going to be shown like they are now. So far, I haven't seen anything that suggests the GFE will change in any way.
The next few weeks will be interesting. I say weeks, because there is a short leash on getting this done.
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