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Loan Officer Compensation and Anti-Steering Rules... Higher Rates and costs will be the norm?
The Regulatory Rule - Loan Officer Compensation and Anti-Steering Rules The Federal Reserve Board's final rule was issued on August 16, 2010 which amends the Truth in Lending Act (TILA) regulation (Regulation Z) by adding three new rules:
Basing loan officer compensation on loan terms or conditions other than the loan amount is prohibited.
Compensation of the loan originator by both the consumer and any other party (i.e. lender) for the same transaction is prohibited. Compensation can be paid only by a single source (e.g. generally either the consumer or the Lender). This is commonly referred to as the "Dual Compensation Rule".
Steering the consumer to a loan product or feature based on the ability of loan originator to receive greater compensation is prohibited.
How will this affect rates? The flat fee loan and higher closing costs will dominate the market. Here are the items and ideas that mortgage companies and banks are considering and rolling out.
Some examples of Mortgage Loan Officer Compensation plans that may be permissible under the new regulations include:
Compensation based on a fixed percentage of the final loan amount
Compensation based on a fixed hourly rate of pay for the actual number of hours ... more

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