We are wondering how the final version of Regulation Z will impact your mortgage branch. Are you ready for these changes? And do you welcome them? It seems like it was yesterday when the Dodd-Frank act started to have a real impact on how we do business. And I can tell that 2014 is likely to look like 2010 did. Then, as I do now, I believed that a good attitude is the best alternative for a changing environment. So let’s dive in.
The final revision of this regulation was announced earlier this year by CFPB. The amendment covered compensation limitations, qualification and screening of loan originators, arbitration, and insurance premiums. I think the rules about compensation, qualification and screening of loan originators will have the greatest impact for the mortgage branch. The new compensation limitations prohibit compensation based on loan terms. By terms, the CFPB refers to the interest rates of the loan, clauses of the loan that penalize borrowers, e.g. early prepayment clauses, or additional purchases by the borrower from the mortgage company or its affiliates. In other words, the commission paid from a loan should be limited to the size of the loan. Furthermore, the loan originator cannot get paid by the borrower and the mortgage company for the same loan, dual compensation. With regards to qualification and screening, comes January 2014, whether the loan originator works for a bank, thrift, brokerage firm, or non-for-profit organization, he/she will be required to undergo criminal and financial checks and character and fitness reviews. Although not new for most of us, the amendment establishes that all those involved in the origination of a loan must be licensed.
The CFPB prefaced the ruling with a reminder of the sub-prime lending crisis, and quoted its director Richard Cordray’s belief that “banning incentives” will keep LOs accountable and will prevent “steering towards risky and high-cost loans.”
The amendment implements and wraps up changes legislated in the Dodd-Frank Act. These changes are not a surprise, and I could assume that there is nothing to be said, but as a person who helps mortgage branches excel I want to know what industry peers are thinking. Are will the new compensation limitations impact you and your branch? Are you preparing to welcome these limitations?
At CrossCountry Mortgage, we have a fully staffed clearance and controls department that helps us stay abreast of regulation changes. Coupled with our branch management solutions, we take over the burden of implementing new industry requirements, and make it easy for members of the mortgage branch to do business as usual. Please visit our website if you are looking to open a mortgage branch, and want to learn more about our mortgage branch opportunities.
As the Mortgage Branch Leader we want to partner with seasoned mortgage professionals who want to open a mortgage branch. Out mortgage branch opportunities are a better alternative to the net branch opportunities out there. As a branch partner, and contrary to a mortgage net branch, working with a direct agent, full eagle lender, you’ll get competitive pricing, full product portfolio, and other benefits. Best of all, we are team oriented company that recognizes that your success is a requirement for the sustainability of our business. Please visit our website to learn more