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#1537379 - 04/19/11 03:56 PM Loan Originator under 226.36
BrendaW Offline
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BrendaW
Joined: Jun 2001
Posts: 230
Texas
If we are considered a "creditor" under the definition of 226.36 then would our employees be considered "loan originators" under that definition? If so then when we are reading about the safe harbor it states the "loan originator" must present the options to obtain safe harbor. If the bank is NOT a loan originator under the definition but it appears that are employees are - then it seems we should be doing the safe harbor even though the bank is not a loan originator by the definition.

THis is confusing!!!!
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Brenda W, CRCM

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#1539304 - 04/22/11 02:01 PM Re: Loan Originator under 226.36 BrendaW
AFaquir Offline
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AFaquir
Joined: Jan 2011
Posts: 763
Top of the world... and never ...
Looking at the definition below creditor and loan orginator are independent of each other. If your institution is a creditor using your own funds, then your employees are originators. If your institution uses table funding from another institution for the purposes of this rule the institution is the originator and its employees are brokers.

This is just a fancy way of saying you can't get around this rule by making the check out to the bank. For example if your bank brokers certain loans to a larger creditor, and the larger creditor cuts a check to your bank for doing all the heavy lifting of taking the application and communicating with the customer, this is not an exempted arrangement. Its like they closed the loophole people were dreaming of in the first place... well if Susie is the originator but the bank gets paid, then we don't have to worry about this rule...

1) Loan originator. For purposes of this section, the term ‘‘loan originator’’ means with respect to a particular transaction, a person who for compensation or other monetary gain, or in expectation of compensation or other monetary gain, arranges, negotiates, or otherwise obtains an extension of consumer credit for another person. The term ‘‘loan originator’’ includes an employee of the creditor if the employee meets this definition. The term ‘‘loan originator’’ includes the creditor only if the creditor does not provide the funds for the transaction at consummation out of the creditor’s own resources, including drawing on a bona fide warehouse line of credit, or out of deposits held by the creditor.


It is confusing, but consider the "intent" of the rule... to avoid the temptaion to guide a customer to a loan that is not right for them.

Cheers!
Last edited by AFaquir; 04/22/11 02:30 PM.
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