Are you disclosing broker compensation correctly?
A quickie on broker compensation.
Do you sometimes work with or as a mortgage broker? Maybe you broker out FHA loans because you don't have a DE underwriter. Maybe you accept broker loans from a geography where you are only just starting to develop market share.
Well one thing our audits are picking up is that they aren't always disclosed correctly. I'd guess the confusion comes from the fact that how we disclose broker compensation is different on the Loan Estimate and Closing Disclosure, and also depends on whether it is lender- or borrower-paid.
So here's the Rule as simple as I can state it:
1) Loan Estimate: Only Disclose Borrower-Paid On the Loan Estimate, lender-paid mortgage broker compensation is NOT disclosed. Please note this is different than with the GFE. Only borrower paid broker compensation is disclosed on the LE.
2) Closing Disclosure: Both Disclosed On the Closing Disclosure, however, both lender-paid and borrower-paid mortgage broker compensation are disclosed. Borrower-paid will be disclosed as a normal fee paid by the consumer. While lender-paid will be disclosed as paid by others as shown in this picture:
**Reminder** This is probably as good a time as any to remind you of the relatively new "anti-pricing concession" Rule. Under this Rule, mortgage brokers and loan officers generally cannot offer to reduce their own compensation once terms have been offered to a customer (my opinion would be that this occursat least by the time we issue a Loan Estimate). Please reach out if you'd liketo discuss this more - there are exceptions, but the exceptions, in my opinion,are narrower than people think.
In Other News:
The final Military Lending Act Rule is effective October 3, 2016. How does this affect mortgage lending? I don't believe it does. According to my colleague Bryan, it applies to things like payday loans, auto title loans, and tax refund anticipation loans (caps interest rate at 36%!). If this does affect you, read more about it from the FDIC here or call into the office and ask for Bryan.
Read the FDIC Chairman's July 13 speech on De Novo Banks and Industrial Loan Companies (among other things) here on the FDIC website. Very interesting!
Would this need two appraisals? Company selling "prenup homes" that can physically be divided in two in the case of a divorce. Sad state of affairs!
A crisis is bad for business right? Maybe not always. Maybe sometimes it's exactly what you need to get your team to work together and trust each other. Maybe sometimes a crisis forces a company to clean up its practices, eradicate politics, and refocus on how exactly to help customers more than they currently do. But in the words of Patrick Lencioni, "Why wait for a crisis?"
"I would like to die on Mars. Just not on impact." - Elon Musk
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