In response to the changes to loan originator (LO) compensation issued by the Federal Reserve Board (FRB), International Document Services (IDS), a mortgage document preparation vendor, has provided its wholesale customers with a Broker Anti-Steering Loan Option Disclosure within in the idsDoc system so that brokers can certify that they have provided the borrower with the necessary information to achieve safe harbor under the changes to Regulation Z 226.36(e).
As of April 1, the Broker Anti-Steering Loan Option is required when the loan officer receives the application and before the issuance of the Good Faith Estimate (GFE) or Truth in Lending disclosure, as the loan information contained in these documents is document-specific. The new form does not include the necessary information for the applicant/borrower that provides safe harbor under Regulation Z 226.36(e). It merely provides documentation that the information was presented to the borrower, as the changes do not specify a particular format (verbal, written, etc.) in which the information must be presented.
IDS gives clients the options of customizing their Broker Anti-Steering Loan Option Disclosure, which allows them to set-up the types of document packages in which they would like the disclosure to appear every time. Users also have the option to set-up client-specific fields so they receive the disclosure on a loan-by-loan basis.
"The LO compensation changes have been hotly contested, to say the least, and many people are still trying to wrap their heads around what this will mean for the wholesale market at large, as well as their individual businesses," said International Document Services (IDS) President Curt Doman. "We wanted to make compliance with the changes as seamless as possible from the docs side by providing our customers an easy-to-understand form that meets their individual needs."
The FRB's LO compensation rule prohibits payments to loan originators, which includes mortgage brokers and loan officers, based on the terms or conditions of the transaction other than the amount of credit extended. The rule also prohibits any person other than the consumer from paying compensation to a loan originator in a transaction where the consumer pays the loan originator directly and it prohibits originators from steering consumers to consummate a loan not in their best interest based on the face that the loan originator will receive greater compensation for such loans.