Loan originator compensation rule small entity compliance guide
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The CFPB recently issued revised versions of the small entity compliance guides for the Loan Originator Rule and the Home Ownership and Equity Protection Act (HOEPA) Rule. While some of the most well-known provisions of the Loan Originator Rule are the provisions addressing loan originator compensation, the rule also defines the concept of a loan originator and addresses qualification and other requirements related to loan originators. Among various changes, the guide for the Loan Originator Rule is revised to reflect (1) the broadening of an exemption from the concept of a loan originator with regard to retailers of manufactured and modular homes and their employees made by the Economic Growth, Regulatory Relief, and Consumer Protection Act (Act), which was adopted earlier this year (2) the process for contacting the CFPB with informal inquiries about the rule, and (3) that the TILA/RESPA Integrated Disclosure (TRID) rule is now in effect (the prior version of the guide was issued in March 2015 and the TRID rule became effective in October 2015). Among various changes, the guide for the HOEPA Rule is revised to reflect (1) the broadening of the exemption from the concept of a loan originator made by the Act (which is noted above), as this can affect the requirement to include loan originator compensation in points and fees for purposes of the points and fees threshold under the HOEPA rule, and (2) the process for contacting the CFPB with informal inquiries about the rule. Note that for purposes of the points and fees cap to determine qualified mortgage loan status under the ability to repay rule, the definition of “points and fees” set forth in the HOEPA rule is used. As a result, corresponding changes likely will be made to the provisions of the small entity compliance guide for the ability to repay rule to reflect that the Act’s broadening of the exemption from the concept of a loan originator with regard to retailers of manufactured and modular homes and their employees may affect the calculation of points and fees for qualified mortgage purposes. The current version of such guide was issued in March 2016, and the version of the guide on the CFPB’s website includes a notice that the guide has not been updated to reflect the Act. The Bureau of Consumer Financial Protection issued updates to its small entity compliance guides for the Loan Originator Rule and the Home Ownership and Equity Protection Act (HOEPA) Rule. The guides are intended to provide simple summaries of the BCFP’s regulations and highlight issues which may affect smaller loan originators and creditors. The Loan Originator Rule governs such things as defining who is a loan originator, loan originator compensation, recordkeeping, qualifications, and compliance policies and procedures. The updates to the Loan Originator Rule guide address 1) new exemptions from the rule for retailers of manufactured homes and their employees; 2) the process for contacting the Bureau with informal inquiries about the Loan Originator Rule; and 3) changes due to the TILA-RESPA Integrated Disclosure Rule (TRID) having taken effect since the publication of the prior version of this guide. The HOEPA Rule applies to certain types of high-interest rate or high-fee loans, including purchase-money mortgages, refinances, closed-end home equity loans, and home equity lines of credit. The rule requires that lenders give additional disclosures, avoid certain loan terms, and ensure that consumers receive additional protections, including homeownership counseling. The updates to the HOEPA Rule guide address 1) the process for contacting the Bureau with informal inquiries about the rule; 2) broadening an exemption for manufactured home retailers regarding what loan originator compensation must be included when calculating points and fees; and 3) clarification on effective dates.
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Header Search FormLogin - Request InfoOn June 7, the CFPB published a Small Entity Compliance Guide for the
Loan Originator Compensation Rule. The CFPB’s goal is to provide an overview of the Rule in a plain language and FAQ format, making the content more accessible and useful for a broad array of industry constituents, especially smaller
businesses with limited legal and compliance staff.  SOLUTIONS THAT WORK. TECHNOLOGY TO STAY COMPLIANT. |
