One of the pleasant surprises of the Consumer Financial Protection Bureau's
Specifically, the CFPB stated that adjustments to compensation would be viewed in their totality. A lender's mid-loan adjustments would be reviewed to ascertain whether a lender was abusing the practice—as opposed to permitting adjustments only where truly unforeseen events lead to the need for a reduction in compensation. A key, according to the CFPB, would be adherence to consistent policies and clear documentation supporting the unforeseen event warranting the compensation adjustment. In addition, the frequency and pattern of such adjustments will be scrutinized.
In the end, there will be fewer situations permitting changes to compensation than lenders would want and the situations where lenders would most desire impacting compensation do not fall within the parameters permitting mid-loan compensation change. Still, given that most lenders expected nothing of this sort, the fact that lenders don't have to take the financial hit all the time is a positive step in the right direction. It is not, however, open season where lenders can start using compensation adjustments mid-stream to address performance deficiencies of originators.