Loan Officer Compensation Rules Finalized

re: Loan Officer Compensation Rules Finalized

Tim Weldon — Fri, 15 Feb 2013 20:22:37 GMT

You only have to look at the National Association of Realtors to see the benefits of self-policing. NAR has installed a standard of ethics and duties for its members and created a strong enough lobby in Congress that they may be frequently attacked, but rarely lose a battle. The diligence with which the NAR enforces its standards may be questioned, but their existence provides cover from the well-intentioned (maybe) in Congress whose lack of understanding of the mortgage industry is obvious as they spew forth superfluous drivel in an attempt to have it be accepted as genuine academia. If the highly fractioned industry had created a national self-policing agency on its own, then Congress would never have gotten involved. While I always thought I was a fair originator, it wasn't until I was running a mortgage bank accepting wholesale loans that I realized how charitable I really was. We can all site examples of absurd commissions that we have seen earned on loans. Are we really surprised that a regulatory authority had to step in? Thinking back to 2006, how would you have required loan officers to join an organization and give up even 1% of their income to have a voice in Congress. Many of the originators had no idea what a disclosure was, nevermind the relationship between Congress and a TIL. The fluff in the industry allowed genuinely average in skill and aptitude, to earn an income commensurate with professional athletes. The unfounded arrogance that accompanied that income showed the delusional belief that income created intellect. Having sat in on a few NAMB meetings, it was obvious they were an impotent organization whose existence was token at best, and comical at worst. Where would we be now if home prices hadn't crashed? Who would be originating loans if Dodd-Frank never happened? When will the industry band together and create its own standards to have Congress adopt? I move we cease complaining about Dodd-Frank until we present our own option....which is already at least 10 years overdue.

re: Loan Officer Compensation Rules Finalized

Frank Ceizyk — Fri, 01 Feb 2013 05:41:58 GMT

clarifying the last sentence--since these (extra $$ spent to pay down on a financed purchase appraisal miss) are NOT loan costs, this doesn't fall under any of the QM or QRM protections as far as I can tell.

re: Loan Officer Compensation Rules Finalized

Frank Ceizyk — Fri, 01 Feb 2013 05:30:17 GMT

Ronnid--I agree with you--but the answer is in this statement: the problem for the consumer is they have no idea of the trust cost of protection. But you have to expand your vision--this was NOT just about bad loans. This was about bad SPECULATIVE HOUSING PRICE PRACTICES too. Bad loans made it easy to bid up houses--but there were no economic fundamentals at work to control the pace or amount of the annual increases. What causes house prices to rise? Or better yet, what SHOULD cause house prices to rise. How much is too much? And please don't give me the "it's what a buyer and seller are willing to pay". You can pitch that when you are doing a cash offer--but when we are lending 96.5% leveraged money to people to buy an asset that also happens to be their primary form of shelter in most cases, saying "it's just the market" is not going to fly. You couldn't originate a bad loan if you wanted to--but you sure as hell could see a consumer pay too much for a house in a bidding war and then end up having to reduce his/her net worth by however much cash is needed complete the purchase when the appraisal used for the financing doesn't match the "housing price trends" we keep hearing about. Already hearing examples of buyers paying $10k, $15k, or more to finish a financed purchase on missed appraisals--but since these are loan costs this doesn't fall under any of the QM or QRM protections.

re: Loan Officer Compensation Rules Finalized

Ronnid Giberson — Thu, 31 Jan 2013 15:47:02 GMT

I have been a Mortgage Banker and originator for 30 years and we didn't regulate our selves very well and are now paying the price. But on the flip side we were not the only ones involved yet we have taken the brunt of the blame. The problem for the consumer is they have no idea of the true cost of protection. The Market made most of the correction without any government intervention. You couldn't originate a bad loan right now if you wanted too, as far as I know. Who is there to buy it.

re: Loan Officer Compensation Rules Finalized

Frank Ceizyk — Wed, 23 Jan 2013 04:59:27 GMT

Wow--we're back to blame and hopelessness after this news? HARP 2.0 is allowing so many upside down borrowers to refinance and reducing the likelihood they will become rational defaulters. Appraisals--purchase and refinance are starting to show signs of stabilization and even appreciation in some cases. Rates remain at insanely historical lows. As Zig Ziglar used to say "Life just ain't that bad". There is no reason ethical LOs can't continue to contribute to the conversation by educating customers and posting real life examples of what we do to serve and protect consumers every single day, as well as provide the details of stuff that just isn't working, or is even hindering progress in housing recovery. Lion has 30 years of success stories, Cindy has 25 years of success stories, and I have 22 years of success stories, some of which I have shared in the past 6 months. Imagine if every community member posted a real life example of how we serve and protect consumer every day for the next year on Community Commentary! Or showed a detailed from the closing table example of something that harms consumers..then then offer a more common sense alternative. The regulatory and legislative powers that be would have written proof from an ethical body of LOs SHOWING them that consumer protection is built into our business practices. No one wins, if no one tries. And I hate the word try anyway--because it gives an easy out. Do or do not. There is no try. We just haven't done what needs to be done. Unless you're pushing up daisies, there's always time to do something ...or at least contribute to the conversation.

re: Loan Officer Compensation Rules Finalized

cindy vance — Mon, 21 Jan 2013 22:30:57 GMT

I have been lending for over 25 years and I did not take advantage and overcharge my borrowers. You are all correct and unfortunately, it is true, the borrowers are going to lose now, once again. I am now working for a bank, tied up in regulation and clock ticking dates that prevent me from earning a decent living. The business is extremely difficult now and it was not the originators who caused the problem. I always offered my borrowers a choice and never charged or earned ysp of more than 1.5% ever. It really bothers me that the honest and reliable LOs that were ethical and did a great job are paying the price as well. I have lost so much respect for the industry due to the effort to protect the consumer but once again missing the mark. Perhaps if actual ethical LOs were able to contribute to the conversation before the decisions were made to screw us all....consumer and LOs...no one wins

re: Loan Officer Compensation Rules Finalized

CompetitionBenefitsConsumers — Sat, 19 Jan 2013 19:50:08 GMT

The majority of borrowers with high risk loans demanded them to manage the ever higher effects of appreciation wrought by manipulated rates and the frenzy those rates created. All this mandate does is reduce consumer choice and makes it more difficult for brokers to compete. Banks are free to charge more for smaller loans and less, on a percentage basis, for larger loans, including jumbos, brokers cannot do this on lender paid transactions. Consumers can pay compensation to banks both directly, and from SRP (YSP for brokers), but consumers are NOT allowed to pay brokers this way. At one time consumers who had been denied at a bank could depend on brokers for their financing because even though their scenario was difficult, brokers could be paid for their time and expertise to obtain a loan for the consumer. Now, consumers just get denied, just like at the bank. A broker can no longer even entice consumers business by advertising a free appraisal because it would change the compensation on a lender paid transaction and therefore be illegal, but banks, credit unions, and lenders can! In fact, if you were to design legislation to eliminate consumer’s advantages in using a broker, along with HVCC/AI which effectively eliminates a consumer’s choice to select an appraiser based on price, quality, or service, and especially portability after the value is known, this is what it would look like. Once again the consumer loses. The consumer always loses.

re: Loan Officer Compensation Rules Finalized

Ray Leone — Sat, 19 Jan 2013 18:09:38 GMT

Steer my clients to higher rate loans so I can earn a higher commission? Are you crazy? How am I, a fully CA-DRE and NMLS licensed mortgage broker, supposed to stay in business if I do that to my clients? I have been originating loans for 30+ years. My business is based on referrals from satisfied clients. And yes, I'm as good as my last loan. And proud of it. I serve my clients best interest whether that was a Neg Am loan (there was a good reason for originating this type loan at one time), an Interest Only loan, a Stated Income (but VERIFIED ASSETS) loan for my self employed borrowers (only)... Look to place the blame on Wall Street-MBSs, Derivatives, Lehamn Bros., Bear Stearns, Merrill Lynch if you want to find the origins of the credit crisis. If there was no product to sell there would have been no crisis. My blood pressure is up, enough said for today :-(

re: Loan Officer Compensation Rules Finalized

Frank Ceizyk — Sat, 19 Jan 2013 04:48:59 GMT

All seems to be going in a common sense relatively industry friendly direction so far, while still providing protections for consumers. And Bryan--to answer your question--these agents of the government get paid to enforce these rules because we didn't regulate ourselves, and to date, have not provided a unified alternative. Society has paid a heavy price for free enterprise gone wild.

re: Loan Officer Compensation Rules Finalized

Anthony Bosch — Sat, 19 Jan 2013 03:15:56 GMT

Allowing Loan Officers to be paid commissions on the volume of loans originated is the greatest victory here. My biggest fear was that my earnings were no longer to be commensurate with my production and that would have been an American tragedy. All I've been hearing lately is salary or hourly; take your pick. I choose neither! Just pay me what I'm worth based on my production!!!!

re: Loan Officer Compensation Rules Finalized

michael wolff — Sat, 19 Jan 2013 00:32:04 GMT

Arent these rules already in effect? e.g. not being paid by both lender/borrower, no incentive for higher rates, background check, testing/education, etc?

re: Loan Officer Compensation Rules Finalized

Bryan/Mortgage Finance Group, Inc. — Sat, 19 Jan 2013 00:27:27 GMT

We as a society should instead determine when, how much and why these agents of the govt. get paid - who do they think they work for, anyway? Just another assault on our free market principles, liberties and freedoms.