LO Comp Definition Clarified by CFPB

The Consumer Financial Protection Bureau has published a regulatory notice, effective January 1, 2014, that clarifies the definition of “amount of credit extended” for purposes of calculating loan originator compensation.
 
For closed-end reverse mortgage loans, the “amount of credit extended” for purposes of § 1026.36(d)(1) means either:

  1. The maximum proceeds available to the consumer under the loan; or
  2. The maximum claim amount as defined in 24 CFR 206.3 if the mortgage is subject to 24 CFR part 206, or the appraised value of the property, as determined by the appraisal used in underwriting the loan, if the mortgage is not subject to 24 CFR part 206.

 
While staff from the Federal Reserve Board had “verbally” provided similar guidance previously, this is now “codifed” by the CFPB issuance.
 
To view a copy of the final rule that changed the effective date for certain provisions of the 2013 Loan Originator Compensation Final Rule from January 14 to January 1, 2014, please click here. If you have additional questions, please consult with your internal legal counsel.