NCSHA Comments on CFPB’s Proposed Lender Compensation Rule

On October 16, NCSHA sent the Consumer Financial Protection Bureau (CFPB) comments on its proposed rule that would set new compensation and qualification standards for mortgage originators.  In the comments, NCSHA expressed strong concern that the proposed ban on lenders basing loan officer compensation on the terms of the transaction, as written, could discourage lenders from originating HFA loan products.  NCSHA urged CFPB to amend its proposal, so as to allow lenders to compensate loan originators differently for originating HFA loan products to incentivize lenders to help homebuyers served by HFA programs.

These comments were based on input NCSHA received from several HFAs who have heard from their lending partners that, if the proposed rule were to go into effect as it is currently written, they would no longer be certain that they could differentiate between HFA and non-HFA loans in their compensation policies.  Some lenders have suggested this might lead them to reduce their HFA lending.  NCSHA argues that lenders need certainty to ensure that they can adopt compensation policies that take into account the costs associated with originating HFA loans. 

The letter also expresses support for CFPB’s proposal to exempt state HFA employees from the increased registration and licensing standards for loan originators proposed under the rule.

For more information on this proposed rule, you can visit NCSHA’s blog post summarizing it.