We had a bonus plan proposed that we believed was compliant under Reg. Z's MLO Comp rules. It was based on loan volume (dollar amount) and portfolio performance (good standing vs. default).
We were criticized for the plan from a Fair Lending perspective because basing bonuses on dollar amount of loans could encourage lenders to make high dollar loans only, creating a disparate impact on LMI individuals and protected groups under the FL laws.
I wanted to make others aware of this, as now we are going back to the drawing board to try and figure something else out. I am thinking we'll either have to tier out categories of loan amounts (to ensure smaller-amount loans aren't avoided)... or do it by number of loans instead.
Any thoughts or similar experiences would be appreciated!