The Consumer Financial Protection Bureau (CFPB) recently received a letter from the Consumer Mortgage Choice Coalition (CMCC), a division of the Consumer Mortgage Commissioner’s Association (CHLA). In their letter, the CMCC proposed changes to existing regulations related to loan originator compensation and fees. The CMCC proposed a few specific changes related to compensation flexibility:

• Allowable payment splitting: Allow servicers to pay loan originators and other mortgage professionals based on factors such as time, experience, and market forces, instead of one lump sum.
• Rescission flexibility: Allow lenders to increase upfront compensation for loan originators for loans where a borrower has decided to rescind a loan, and remove limits on how much lenders can pay in these cases.
• Earnest money flexibility: Allow lenders to increase upfront compensation for loan originators based on the borrower’s earnest money deposit amount, instead of keeping compensation consistent regardless of the amount.

The CMCC strongly believes that these changes would create more alignment between lenders, servicers, and loan originators. The CMCC believes that this alignment will create a better experience for borrowers, as well as increased market transparency and liquidity. The CMCC believes that the expanded compensation structure would allow lenders to make better decisions regarding loan origination and compensate loan originators fairly and responsibly.

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