The final rules, which apply to closed-end loans secured by a consumer's dwelling, will prohibit payments to the loan originator that are based on the loan's interest rate or other terms. But compensation that is based on a fixed percentage of the loan amount is permitted. The final rules prohibit a mortgage broker or loan officer from receiving payments directly from a consumer while also receiving compensation from the creditor or another person. It also prohibit a mortgage broker or loan officer from "steering" a consumer to a lender offering less favorable terms in order to increase the broker's or loan officer's compensation.
Moreover, the final rules also provide a safe harbor to facilitate compliance with the anti-steering rule. The safe harbor is met if the consumer is presented with loan offers for each type of transaction in which the consumer expresses an interest; and the loan options presented to the consumer includes the lowest interest rate for which the consumer qualifies, the lowest points and origination fees, and the lowest rate for which the consumer qualifies for a loan with no risky features, such as a prepayment penalty, negative amortization, or a balloon payment in the first seven years.
The final rules are effective April 1, 2011. After a lot of talk about a possible delay, it looks like everything will go into effect next week. A few lenders have already started using the new compensation rules.