At the urging of several trade groups, the Consumer Financial Protection Bureau has decided not to prohibit mortgage companies from using profits to make contributions to their loan officers' 401(k) plans.
"To provide clarity at this juncture, the Bureau's view is the Compensation Rule permits employers to contribute to Qualified [pensions] Plans out of a profit pool derived from loan originations," according to an April 2 bulletin issued by the CFPB Office of Regulation.
The loan officer compensation rule promulgated by the Federal Reserve Board prohibits loan officers from being compensated based on the profitability of the loans they originate.
The CFPB inherited jurisdiction on LO compensation in July. The American Bankers Association urged the bureau to consider a clarification regarding pension plans. "Bank examiners are taking a rigid position that year-end bonus payments or contributions to 401(k) plans are rendered illegal if they are related to overall bank profit," ABA said in an August letter to the CFPB.
The new bulletin addresses qualified plans -- but not other profit-sharing arrangements.
"We anticipate providing greater clarity on these arrangements in connection with a proposed rule," the CFPB says.
The agency is expected to issue a proposed rule this summer to address several LO compensation provisions in the Dodd-Frank Act as well as issues raised by the industry.
