For portfolio loans vs. loans sold to secondary market it appears we meet the first condition because terms of loans held in portfolio are consistently different than terms of loans sold. Not sure on second condition. If the LO offers the portfolio loan only if the consumer does not meet secondary guidelines does the second condition apply?

If meet both conditions do we have to compensate portfolio loans the same as secondary loans to comply?

See the end of this thread...

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1993310#Post1993310

Short answer: Yes, you need to compensate the same for in-house portfolio as for secondary.

Given the commentary...Are we okay if we compensate more for secondary loans than for portfolio loans?

Not based on my conversation with the FDIC.

Our mortgage department personnel are compensated seperately from our salaried bank loan officers. Our bank loan officers do not make FNMA, USDA-RD or FHA loans. Has this changed?

Bump! I'd like for Dani to revisit this tread if possible. We are looking at revamping our Comp. Policy.
thank you.

CCMAN, what are you looking to have clarified or looking for feedback on?

To my knowledge, the bank can structure compensation differently among classes of employees (ie salary for in-house portfolio lenders, commission for 2nd originators) provided that the employee's respective compensation does not differ because they refer an loan over the other channel. For example, if the inhouse portfolio lender is salaried and receives only salary for portfolio loans, but a flat referral fee for sending one over to the secondary market department, that is prohibited. So if you pay an incentive on one channel of loans, the same incentive would have to apply to the other channel of covered loans for that employee.

The employee has to receive the same compensation for each type of loan they touch (originate or refer). So you could have salaried inhouse portfolio lenders that receive a flat-fee incentive for all loans they originate or refer to the secondary market channel, provided the flat fee is the same regardless of which channel originates the loan. And you could have commissioned secondary market originators that receive incentive on all loans they originate or refer to the inhouse channel, though the crux with this is how do you apply the same incentive to loans they originate and loans they refer since they are on commission.

Hope that makes sense.