Page 1 of 2 1 2
Thread Options
#1804519 - 04/14/13 12:25 PM Referrals from Tellers
Random Offline
Gold Star
Joined: Jun 2008
Posts: 287
It looks like a teller who refers a customers to a mortgage loan officer may fall into the new definition of loan originator and any compensation paid to them for the referral would need to be included in the points and fees test. Does anyone else read it that way?

Return to Top
Loan Originator Compensation Rule
#1804541 - 04/15/13 01:04 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Yes, see this post. i gave the preamble page number that lists a teller example.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1805214 - 04/16/13 07:47 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
https://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1783513

See post 1783459.

(Sorry it wasn't in the original answer. It was just pointed out to me.) blush
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1821191 - 06/06/13 07:54 PM Re: Referrals from Tellers [Re: Random]
TMatt87 Offline
Diamond Poster
TMatt87
Joined: May 2011
Posts: 1,860
Idaho
Is this still the case after the new final, final rule that excludes LO compensation from the points/fees test?
_________________________
All opinions are my own, not my employer's

Return to Top
#1821788 - 06/07/13 08:28 PM Re: Referrals from Tellers [Re: Random]
Matt_B Offline
Diamond Poster
Matt_B
Joined: Sep 2011
Posts: 1,648
A CU, Where Regs Don't Apply
Page 16-17 on the small entity guide that just came out:

Quote:
II.
What actions make me a loan
originator?
You may be a “loan originator” if you are an organization or
individual that for compensation or
other monetary gain performs loan origination activities, such as:
...
Referring a consumer to a loan originator or creditor


_________________________
Someone's about to get horned!

Return to Top
#1821799 - 06/07/13 08:36 PM Re: Referrals from Tellers [Re: Random]
Shopgirl Offline
Diamond Poster
Joined: Aug 2003
Posts: 1,264
Southeast
I understand that a teller who refers business to the mortgage loan officer would be considered a loan originator and therefore compensation rules come into play. However, do the same rules requiring registration come into play?

Return to Top
#1821811 - 06/07/13 08:46 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Registration is only required if the employee meets the 2-prong test under the SAFE Act. This is 2 separate rules even though they use similar terminology. Don't confuse the requirements.

An employee can be an LO under Reg Z only or under both Reg Z and the SAFE ACT. Hint: If the employee is an MLO under the SAFE Act, they are always an LO under Reg Z.

For an employee to be an LO under Z, they only have to do ONE of the activities listed. You have to do a background and credit check and conduct training for those employees (as well as apply the comp rules).

For an employee to be an MLO under the SAFE Act they MUST both accept applications for covered loans AND offer or negotiate terms with the consumer. Only those employees have to register.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1821813 - 06/07/13 08:47 PM Re: Referrals from Tellers [Re: TMatt87]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Originally Posted By: TMatt87
Is this still the case after the new final, final rule that excludes LO compensation from the points/fees test?


If you are asking are they still LOs under Reg Z, yes.

If you are asking if their referral fees get counted in the points and fees test, I don't know anymore. I am behind on my reading. Hopefully someone else can weigh in on that one.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1826911 - 06/24/13 10:00 PM Re: Referrals from Tellers [Re: Random]
Matt_B Offline
Diamond Poster
Matt_B
Joined: Sep 2011
Posts: 1,648
A CU, Where Regs Don't Apply
Well, it would appear that our fears have been proven to be wrong in the latest proposed amendments. I'll let you read for yourself (pages 83-85ish in particular) but this quote sort of sums it up:

Quote:
Thus, a person who discusses with a consumer that, based on the consumer’s financial characteristics, a creditor should be able to offer the consumer an interest rate of 3%, would be
considered a loan originator. However, a person who merely states general information such as “we offer rates as low as 3% to qualified consumers” would not be considered a loan originator
under the proposed rule because the person is not offering particular credit terms that are or may be available to that
consumer selected based on the consumer’s financial characteristics.


They even specify that they hadn't intended to imply that staff such as tellers would be included as loan originators. Granted, this is proposed, but good to hear I think. Simplifies things a bit.
_________________________
Someone's about to get horned!

Return to Top
#1826935 - 06/24/13 11:22 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Matt, do you have a link to the document this quote comes from?
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1826950 - 06/25/13 11:42 AM Re: Referrals from Tellers [Re: Random]
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 74,489
Galveston, TX
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1826961 - 06/25/13 12:28 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Thanks!
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1827017 - 06/25/13 02:16 PM Re: Referrals from Tellers [Re: Random]
Matt_B Offline
Diamond Poster
Matt_B
Joined: Sep 2011
Posts: 1,648
A CU, Where Regs Don't Apply
Thanks Randy. I should have linked it, but I guess I figured everyone hung out waiting for CFPB emails and jumped on them right away!

Dani, feel free to copy and paste my info for successive answers that I'm sure you will provide to others in summary format!
_________________________
Someone's about to get horned!

Return to Top
#1827073 - 06/25/13 03:06 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
laugh @ Matt!

I haven't read it all yet, but I did skim through the section that you noted. I read it as more addressing passive referrals. I still think that they do intend on any active referral solicitation to be covered. When I say active referral solicitation, I'm talking along the lines of "hey next door neighbor, do you want a mortgage" as I chase them down the street. Meaning that I as an employee am actively seeking out and bringing business into the bank. I think the amendment is more addressing passive sales at the teller line itself (ie "hey Mr. Customer, don't forget we have a mortgage department to help you" type things). Still it is some relief. Hopefully they will be more concrete in what they mean when it is finalized.

Honestly, I wish they would just make up their minds. Either referrals are covered activities or they're not. The easiest solution would be to just line the Reg Z definition up with the SAFE Act definition, but that would actually make sense, and obviously we can't have any sense when it comes to federal regulations.

::steps off soap-box now::
Last edited by Dani York, CRCM; 06/25/13 03:13 PM.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1827457 - 06/25/13 08:47 PM Re: Referrals from Tellers [Re: Random]
MyScamper Offline
Gold Star
Joined: May 2006
Posts: 452
Between here and there
I'm still concerned about referral fees. We pay referral fees to all employees outside of the mortgage department. So if a commercial lender refers one of his clients to one of the mortgage originators for a loan, I'm pretty sure that he is now himself a loan originator because he collects some info before he makes the referral. That could have an impact on his year-end bonus, correct? And it would seem that the referral would have to be included in the points and fees because we know how much the referral fee is going to be.

Return to Top
#1829510 - 07/02/13 01:13 PM Re: Referrals from Tellers [Re: Random]
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,831
Yes, if he acts as an originator for more than 10 in a twelve month period or it accounts for more than 10% of total compensation.

Return to Top
#1831093 - 07/08/13 10:24 PM Re: Referrals from Tellers [Re: Random]
Brad B Offline
100 Club
Brad B
Joined: Apr 2002
Posts: 213
KS
I am still trying to put these referral pieces together. Please confirm whether I am on or off the right track:

Our tellers earn a referral fee and keep the conversation in general terms so as to not become a "loan originator." If the teller is not a "loan originator" it appears to me that the referral fee we pay them WILL need to be included in the points and fees calculation under § 1026.32(b)(1)(ii)(C)

Requirements for high-cost mortgages.
* * * * *
(b) * * *
(1) * * *
(ii) All compensation paid directly or indirectly by a consumer or creditor to a loan originator, as defined in § 1026.36(a)(1), that can be attributed to that transaction at the time the interest rate is set unless:
(C) That compensation is paid by a creditor to a "loan originator" that is an employee of the creditor.

Alternatively, if our tellers ARE loan originators, then the referral fee would not be counted toward points and fees but then we have the qualification requirements to deal with.

Does this seem accurate?
_________________________
"Sarchasm" is the gulf between the author of sarcastic wit and the person who doesn't get it

Return to Top
#1831172 - 07/09/13 02:36 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
If you pay them a referral fee how are they not a loan originator under Reg Z? The general terms speech would get you out of the MLO definition of the SAFE Act, but by soliciting a referral for a fee they meet the definition of loan orginator under Reg Z. A referral can be as simple as "Hey Mr. Customer/Neighbor/Stranger on the Street, are you looking for a mortgage loan? If so, I can have Mr. Mortgage Officer contact you." If they get paid a fee for doing that, they are loan originators under Reg Z.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1831296 - 07/09/13 05:18 PM Re: Referrals from Tellers [Re: Random]
Brad B Offline
100 Club
Brad B
Joined: Apr 2002
Posts: 213
KS
Thank you! I get it. I was hung up in that our tellers do not discuss particular credit terms or assess a consumer's financial characteristics. The referral really is as general as you wrote above but that activity alone makes our teller a loan originator under Reg Z.
_________________________
"Sarchasm" is the gulf between the author of sarcastic wit and the person who doesn't get it

Return to Top
#1838602 - 08/01/13 06:43 PM Re: Referrals from Tellers [Re: Random]
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,831
Are most of you trying to avoid having everyone be considered a mortgage loan originator or are you removing referral incentives and instructing employees that they are not to provide anything more than contact information at the customer's request with respect to consumer mortgages?

Return to Top
#1838628 - 08/01/13 07:17 PM Re: Referrals from Tellers [Re: terpsfan]
Carolina Blue Offline
Platinum Poster
Carolina Blue
Joined: Jul 2005
Posts: 945
Lost in a regulatory fog
We're getting rid of our referral fee and will have training to ensure all non-loan originators do not collect or evaluate an applicant's information. They will only direct an applicant to the nearest originator.

Return to Top
#1838700 - 08/01/13 09:09 PM Re: Referrals from Tellers [Re: Random]
*W*W* Offline
Platinum Poster
Joined: Feb 2010
Posts: 835
As long as we provide TIL training to our tellers, can't we still pay the referral fee to tellers for simply saying, "Hey, Neighbor Joe. You need to see Tina about a mortgage?"

We do background and credit check prior to employment for all employees.
Last edited by *W*W*; 08/01/13 09:10 PM.
_________________________
Live Like No One Else!
CRCM

Opinions expressed are my own and do not reflect the views of my employer.

Return to Top
#1838768 - 08/02/13 12:40 PM Re: Referrals from Tellers [Re: *W*W*]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
Originally Posted By: *W*W*
As long as we provide TIL training to our tellers, can't we still pay the referral fee to tellers for simply saying, "Hey, Neighbor Joe. You need to see Tina about a mortgage?"

We do background and credit check prior to employment for all employees.


Yes.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1838770 - 08/02/13 12:45 PM Re: Referrals from Tellers [Re: Random]
Dani York, CRCM Offline
Power Poster
Dani York, CRCM
Joined: Apr 2005
Posts: 3,663
TN
One other thing to consider is that just because you remove the referral fee or incentive program, doesn't mean you are no longer paying compensation for referral activities. COmpensation includes salary and hourly rate of pay. If it is part of the employee's job description or unwritten expectations that the employee will refer business to the bank (including covered loans), they are still a loan originator under Reg Z.

Be sure that if you are taking that stance that you will train your staff not to solicit referrals, make sure any job descriptions or un-written management expectations are also taken into consideration and amended as needed.
_________________________
I can't herd the cats anymore, so I just set up the electric fences and let them fry when they stray out of bounds.

Return to Top
#1838774 - 08/02/13 01:03 PM Re: Referrals from Tellers [Re: Random]
terpsfan Offline
Diamond Poster
Joined: Feb 2007
Posts: 1,831
If you keep the referrals in place then how do you track how many loans they act as originators for the compensation rules?

If anyone receives a bonus you must be able to show that the conditions are met below since every employee would be a loan originator.

(iv) An individual loan originator may receive, and a person may pay to an individual loan originator, compensation under a non-deferred profits-based compensation plan (i.e., any arrangement for the payment of non-deferred compensation that is determined with reference to the profits of the person from mortgage-related business), provided that:

(A) The compensation paid to an individual loan originator pursuant to this paragraph (d)(1)(iv) is not directly or indirectly based on the terms of that individual loan originator's transactions that are subject to this paragraph (d); and

(B) At least one of the following conditions is satisfied:

(1) The compensation paid to an individual loan originator pursuant to this paragraph (d)(1)(iv) does not, in the aggregate, exceed 10 percent of the individual loan originator's total compensation corresponding to the time period for which the compensation under the non-deferred profits-based compensation plan is paid; or

(2) The individual loan originator was a loan originator for ten or fewer transactions subject to this paragraph (d) consummated during the 12-month period preceding the date of the compensation determination.

Return to Top
Page 1 of 2 1 2