Mortgage Bankers Association President and CEO Bob Broeksmit is predicting changes to the loan officer compensation rule, renewing hopes that originators could gain more freedom to improve borrower pricing and keep loans from walking to a competitor.
In his remarks during MBA’s Annual Convention and Expo in Chicago on Oct. 12, Broeksmit said the administration’s regulatory agenda includes revisiting LO comp.
“Now, this won’t happen overnight,” he said. “The details will be hammered out over months, but we can still take heart that savings are on the way — because the punitive LO Comp rule that prevents you from improving borrowers’ pricing isn’t long for this world.”
MBA has sought that flexibility for years. Broeksmit’s remarks express confidence that relief is coming, but do not identify the provisions that would change or an implementation date. The Consumer Financial Protection Bureau’s published agenda continues to classify its compensation review as a long-term action, with timing to be determined.
Who Pays To Keep The Loan?
The existing rule allows a lender to improve pricing to compete for a borrower. It generally prevents the lender from funding that concession by reducing the originator’s compensation on the transaction.
The CFPB’s official interpretation of Regulation Z specifically addresses a borrower obtaining a lower rate from another creditor: the creditor and originator cannot selectively lower previously agreed compensation in response. The lender can change the loan’s pricing, but the originator’s compensation cannot change for that reason.
Limited exceptions allow an originator to reduce compensation to cover certain unforeseen settlement-cost increases. The bureau gives the example of an unexpected title issue that delays closing and creates a rate-lock extension fee.
MBA wants broader flexibility. In an April 17 letter responding to the CFPB’s draft strategic plan, the association urged the bureau to use its exemption authority to allow originators to lower compensation in response to competing offers.
That could give an LO another way to retain a borrower, while also reducing what the LO earns on the transaction.
Other industry groups have proposed different approaches. In August, the Community Home Lenders of America asked CFPB to preserve restrictions on compensation between separate companies while removing them from payments a lender makes to its own employees.
What CFPB Is Considering
The bureau’s published regulatory agenda says it is considering whether changes could encourage competition in origination and is weighing the current rule’s effects on price competition.
A separate agenda entry addresses potentially rescinding all or parts of the rule’s discretionary compensation provisions. Both entries list long-term action with dates to be determined.
The distinction between discretionary provisions and statutory requirements matters. The Truth in Lending Act itself prohibits originator compensation that varies with loan terms, other than principal amount. Reviewing the regulation does not by itself repeal that underlying restriction.
MBA is asking CFPB to provide more flexibility within that framework.
A Broader Push To Cut Costs
Compensation reform fits into the affordability campaign outlined by Owen Lee, MBA’s newly installed 2027 chairman and CEO of Success Mortgage Partners.
In his remarks, Lee said MBA had developed 20 reforms that could be pursued without new legislation. He argued that the changes could reduce financing costs by thousands of dollars.
“My second priority is addressing the skyrocketing cost of obtaining a home,” Lee said.
Credit reporting is another target.
“The specific reform is still being worked out, but at this point, I am increasingly confident that tri-merge won’t be around for long,” Broeksmit said. “And the sooner it goes away, the better!”
NMP previously reported on FHFA’s possible move toward bi-merge, which would use information from two nationwide credit bureaus rather than all three. MBA has also advocated a single-file option for borrowers with strong credit profiles.
Bringing More LOs Into Advocacy
Alongside its regulatory push, MBA is seeking a more direct relationship with the originators who work under those rules.
The association and FirstHome IQ announced MBA Homebase on Oct. 12, offering access to continuing education, monthly coaching, FirstHome IQ’s Trust Certification, and opportunities to participate in advocacy. The initiative is open across lending channels, regardless of whether an LO’s employer belongs to MBA.
“Loan officers see firsthand which laws and regulations are working, and which ones are not,” Lee said. “But traditionally, loan officers have never had a dedicated home in this organization. We are changing that today.”
Lee asked companies to help introduce the platform to their originators and described advocacy as a central purpose.
“Most importantly, MBA wants to partner with loan officers to strengthen and improve our advocacy,” he said.
The program is open to nonmembers, but it is not free. MBA’s MLO Force enrollment page lists annual pricing of $150 for members and $300 for nonmembers, with monthly coaching and access to FirstHome IQ’s certificate program included.
The initiatives arrive as MBA acknowledges that the expected market recovery has not materialized.
“I can’t promise that we’ll turn the corner next year,” Broeksmit said. “There are too many variables — too many unknowns.”
For originators, compensation reform would offer a more immediate business decision: whether accepting less on a transaction could help keep a borrower and close a loan. MBA is pressing for that option. CFPB has yet to spell out when, or under what conditions, it might become available.
