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Ethical Practices are the Backbone of Any Business
Ethical Practices are the Backbone of Any Business
More rules and regulations are coming into effect this year, this time via the Consumer Financial Protection Bureau, effectively creating a safer, more ethical atmopshere for consumers.
The new rules won't effect reverse mortgages directly, according to an article published in Reverse Mortgage Daily, and will be focused on retail loan originators instead of wholesale loan originators.
A recent National Reverse Mortgage Lenders Association webinar, however, noted that loan originator compensation will affect how loan transactions are done, especially among fixed rate reverse mortgages. Fixed rate HECM loans have become a minority though, since the elimination of the fixed rate standard on July 1. The only fixed rate product available under the reverse mortgage product is the HECM Saver loan.
The new rules will implemented to prevent another Castle & Cooke scandal from happening, where a Utah lender persuaded borrowers to take out mortgage loans with high interest rates and then compensated its loan originators with bonuses based on the loans' interest rates. The Federal Reserve's loan officer compensation rule, however, bans compensation based on the terms of originated loans such as interest rates. THE CFPB estimates that around 150 loan officers were paid ... more

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