Mortgage Loan Originators

Wells Fargo sent out word to its broker clients ...

Posted on Thursday, December 23, 2010

Wells Fargo sent out word to its broker clients that, per the existing schedule,
> on April fool's Day 2011 the new comp rules go into place. Wells expects to put
> out its plan in February, but reminds us "The rules prohibit a loan originator
> from: Receiving compensation based on the interest rate or loan terms other than
> loan amount, increasing their compensation by raising the consumers' loan costs
> - for example by increasing the interest rate, or directing or "steering" a consumer
> to accept a mortgage loan not in the consumer's best interest in order to increase
> the compensation. The rules allow a loan originator to: Receive payment from the
> consumer or the lender, but not both. Receive compensation based on a percentage
> of the loan amount and volume. Broker compensation can be paid as a percentage of
> principal loan with minimum and maximum dollar thresholds. Broker Loan Officer (LO)
> compensation can vary by LO provided that the compensation model is the same for
> every transaction originated by that LO. Broker compensation can vary based on
> geography to allow for differences in the costs of loan origination, such as rent
> and other overhead expenses. Compensation models can change due to market conditions.
> The prohibition of paying compensation to loan originator based on loan terms and
> conditions does not apply to payments that the customer makes directly to a loan
> originator."

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