The Independent Community Bankers of America (ICBA) has announced that it support of the provisions set forth by the Consumer Financial Protection Bureau (CFPB) rule that will allow community banks to hire and retain qualified mortgage loan originators while providing consumer safeguards against steering and other inappropriate behaviors. The CFPB rule, which bans certain incentives that some loan originators had used to sell unsafe mortgage loans, clarifies that acceptable mortgage loan originator compensation structures include qualified and non-qualified bonus and profit-sharing plans.
“ICBA has worked closely with the CFPB on this rulemaking to ensure that new regulations do not paint common-sense community bank mortgage loan originators with the same brush as the less-responsible lenders that contributed to the housing crisis,” ICBA President and CEO Camden R. Fine said. “The clarifications included in the rule will help ensure that community banks can continue hiring and retaining qualified mortgage loan originators, which will help their customers and communities continue to access credit and recover from the economic downturn.”
The CFPB rule includes participation in both qualified and non-qualified bonus and profit-sharing plans in acceptable mortgage loan originator compensation structures. As a result, mortgage loan originators will be able to participate in both kinds of plans, subject to certain restrictions. The final rule also waived a provision of section 1403 of the Dodd-Frank Act, which would have prohibited consumers from paying upfront discount points and fees to lower their interest rate. The bureau said it was concerned that implementing this section would have caused “consumer confusion and other negative outcomes” and instead issued an exemption to the prohibition on the payment of upfront points and fees while it studies the matter further.
Additionally, all mortgage loan originators will have to meet certain character and fitness requirements, pass criminal background checks and receive training that is appropriate with their origination activities. Community bank mortgage loan originators must be registered with the Nationwide Mortgage Licensing System and Registry and have an NMLS number, though they do not have to be licensed. Community banks already performed background checks on mortgage loan originators, who receive training that was in many ways superior to what is provided through the NMLS.