Forgive me for the double post - I posted this in a different forum and I have not gotten any replies.

I am reviewing the bank's new commission compensation plan that goes into effect soon. There is a statement that says, commission originators have no mortgage authority. Management approval with proper loan authority is required on all mortgages.

I asked for clarification that this means that the originators cannot deny applications. Someone with loan authority must approve/deny all applications. I was told that you do not need loan authority to deny an application. Orignators can deny an application - they just cannot approve an application.

Does this make sense? It doesn't to me? Shouldn't a loan officer with sufficient lending authority have to review an application for approval and/or denial?

This seems like an issue for a lot of reasons. Specifically, because they are eligible for commission compensation only if the loan volume is above a defined volume target.

Thoughts?

If your management wants to give them the ability to deny a request, based on standard criteria, then that is a matter for your internal policy.



This would be more of an issue to me if they had the authority to approve the loan request vs denying it.

Make sure they are appropriately trained in Reg B and fair lending. You may want to have a process for a review of denials for appropriateness and consistency.

See the other post for my response.