Attorney: Final LO Comp Rule Better, But Still Use Caution
While the final loan officer compensation rule is relatively "favorable" compared to earlier versions, originators should still use care in exercising some of the new improvements to it that give them a little more leeway, an attorney told attendees at the New York Association of Mortgage Brokers conference Monday.
Michael Barone, partner at law firm Abrams Garfinkel Margolis Bergson LLP, said a rule that allows loan officers to reduce compensation to pay "unforeseen" charges on behalf of the borrower, for example, still has a "vague" definition and in terms of what unforeseen means and is something the industry still has to be careful with.
If a borrower is called out of the country due to a death in the family and asks for a power of attorney for closing, for example, there are questions about whether the originator has to verify what he or she has been told.
"How do you document that in a file? Nobody knows right now, so be careful with that," he said.