The Bureau of Consumer Financial Protection should revise its outdated loan originator compensation rule to make clear that compensation may vary depending on the product being sold as long as safeguards are in place, according to comments submitted by NRMLA this week.
NRMLA submitted comments in response to a Request for Information, published by the BCFP on March 21, that sought public feedback on whether the agency should amend previously published rules or publish new ones.
The Bureau’s current interpretation of the compensation rule “has impaired access to credit and has caused confusion” for creditors that sell both reverse mortgages and “forward” mortgages.
“Further, mortgage originators should be allowed to offer a reduction of their compensation on a loan in order to benefit the consumer with a reduction in the loan price (either by way of a reduction of the note rate of interest, or loan fees, or both),” commented NRMLA. “Such a benefit to consumers would greatly outweigh any perceived possible regulatory risk.”
The association also asked that the BCFP revisit its policies on the federal Truth-in-Lending disclosures for reverse mortgages. There are three sets of TIL disclosures that vary depending upon whether the reverse mortgage is structured as an open-end or closed-end transaction. “Our members report that this disclosure regime confuses senior consumers,” said NRMLA.
NRMLA recommended that the BCFP eliminate the closed-end credit disclosures and combine an “Important Terms” narrative with the Total Annual Loan Cost (TALC) modeled on the Know Before You Owe disclosure regime created for forward mortgages.
The complete letter is posted to the NRMLA Comment Letters page on NRMLAonline.org, where you can find NRMLA’s comment letters to federal agencies dating back to July 2016.