LO Compensation Issues and Solutions

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As the deadline to comply with the new loan officer compensation rule rapidly approaches, several service providers have unveiled compliance solutions.

The Federal Reserve Board’s loan originator compensation rule goes into effect on applications received on or after April 1. But many are unprepared for the rule.

“It is clear that the Fed adopted a rule with too short an implementation date and with too little guidance for the industry,” Patton Boggs LLP recently wrote to its clients in a newsletter.

The Fed hoped to clarify the rule in a compliance guide for small entities, Regulation Z: Loan Originator Compensation and Steering 12 CFR 226.

But Washington, D.C.-based Patton Boggs reported that the Small Business Administration wrote a letter in February to the Fed concerns that the guide doesn’t meet the requirements of the Small Business Regulatory Enforcement Fairness Act. The SBA requested that the Fed amend the guide and postpone the rule’s implementation date.

In addition, two mortgage trade groups recently filed lawsuits against the Fed to prevent the rule’s implementation.

The Fed hopes to ease some anxiety through a Webinar it hosted Thursday. The Webinar addressed several issues which will be discussed in an upcoming MortgageDaily.com article.

A new loan originator compensation policy manual from AllRegs promises to help lenders comply with the final rule. The Eagan, Minn.-based firm, which is a MortgageDaily.com advertiser, said that the manual can be customized to suit individual companies.

Another Mortgage Daily advertiser, Mortech Inc., announced Monday its own loan officer compensation package. Mortech said it already had compensation features in place for customers to analyze and customize their overall company profit structures.

“Users have the ability to report ‘just missed pricing’ amounts and overages that can be calculated into a ‘point bank,'” according to the Lincoln, Neb.-based technology provider. “Managers can easily analyze the mortgage departments’ performance down to the loan officer level.”

Also accommodating loan officer compensation requirements is QuestSoft, which last month said that its Compliance Eagle platform was integrated into OpenClose.com’s loan origination software. The integration promises to automate the preparation and submission of loan data for the new state exam procedures.

Back in January, Optimal Blue said that the first phase of its loan officer compensation functionality was rolled out. The Plano, Texas-based firm has been seeking feedback on the subject from its customers since last summer. Since then, it has reportedly hosted three roundtables and several Webinars.

“Being ahead of the curve and releasing this functionality gives our customers the confidence they will be in full compliance when the regulation takes effect,” Optimal blue Co-Chief Executive Officer Larry Huff said in the news release. “By rolling out phase I for testing, our customers have the opportunity to once again offer input on how these regulatory changes are reflected within our platform. Additionally, by releasing it early, our customers have the luxury of time to adjust, plan and train their staff accordingly for a completely seamless transition.”

Mortgage Expert

Mortgage Daily Staff