DEC 27, 2013

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Part 1: Leading in a Changing Mortgage Marketplace
What We're Hearing

Five Key January Steps for Lenders

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Consumer Financial Protection Bureau, mortgage lenders January regulatory deadline, mortgage Many of the changes we have been preparing for as an industry will be effective soon. While the list of changes is far too extensive to summarize here, I did want to identify certain compliance requirements/items that a lender should have done already (or should do immediately) based on what we have been seeing from the Consumer Financial Protection Bureau:

1. Make sure you have a competent chief compliance officer in place. This person should have the training, resources, authority, functional independence, and access to ownership/upper management necessary to achieve all compliance requirements.

2. Make sure you have a compliant compensation agreement in place with loan officers that identifies and applies all forms of compensation and all derivations in compensation that could impact final pay. You may, depending upon the complexity of your operations and compensation plan, require a separate compensation policy to supplement your contract. Everything that impacts compensation has to be in writing and has to be reduced to a policy or procedure.

3. Ensure that you have evaluated the actual duties of lending personnel including managers, processors, and loan officer assistants, to avoid any claims of unlicensed activities based upon the expanded definition of origination.

4. Review your marketing strategies. To the extent they involve Marketing Services Arrangements, joint ventures, or affiliates, review to make sure that not only are the agreements compliant, but that the manner in which they are being negotiated and implemented will meet the rigorous standards required by the CFPB.

5. Ensure that you are complying with the 3% cap on points and fees. I particular you should be clear as to the existence of affiliates under the different standards of the Bank Holding Act of 1956, applying the proper amount of any payments to affiliates to the cap, and properly handling bona fide discount points, and loan level price adjustments.

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