CFPB Bulletin Clarifies LO Comp Question

The Consumer Financial Protection Bureau, this week, issued Bulletin 2012-02 in response to several inquiries regarding the new Regulation Z rules on loan originator compensation. 

The CFPB had received several questions on whether the loan originator compensation rules apply to employer contributions to “qualified plans,” such as qualified profit sharing, 401(k)s, and employee stock ownership plans, on behalf of loan originator employees, especially when the employer contributions are derived from profits generated by loan originations.
 
The CFPB said that the current loan originator compensation rules, and the accompanying Commentary, do not explicitly address this issue.  The CFPB said it plans to address this matter when it issues proposed final loan originator compensation rules in the “near future.”  In the interim, however, the CFPB states the current view that employer contributions to qualified plans out of a profit pool derived from loan originations is permissible under the loan originator compensation rules.
 
The CFPB also said that it received questions on how the loan originator compensation rules apply to profit-sharing arrangements or plans that are not “qualified plans.”  The CFPB noted that such questions were usually very fact-specific, and further noted that it would address these matters in the coming proposed rules.

(Editor’s note: Memo prepared by Weiner, Brodsky, Sidman, Kider, NRMLA’s outside legal counsel)