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#2115220 - 01/23/17 10:21 PM Correspondent versus Brokered loan
luvs2trvl Offline
100 Club
Joined: Apr 2013
Posts: 110
Texas
I was asked if we could compensate our Loan Officers differently for those loans originated in our Correspondent channel versus the Brokered Channel. Our Correspondent channel only originates QM loans but we have the opportunity to originate non-QM loans on a brokered basis. The loans are reviewed in the Correspondent channel first and only if they do not meet QM standards would they be allowed to move to the Broker channel for a non-QM product. Would this constitute a transactional term since we document they don't qualify for the QM product. Thanks.

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Loan Originator Compensation Rule
#2115243 - 01/24/17 07:03 AM Re: Correspondent versus Brokered loan luvs2trvl
Inspector Offline
Gold Star
Joined: Apr 2016
Posts: 263
Technically yes, according to the CFPB Guide on the LO Comp rule since these would likely be different products.

Varying compensation to a loan originator based on the “product type” often will violate the rule because many “products” (which is not a defined term) in the market refer to different bundles of specific transaction terms.

Out of curiosity, if you have a policy of always running loans through the correspondent channel first why do you need to compensate differently on alternative loans?
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#2115244 - 01/24/17 12:31 PM Re: Correspondent versus Brokered loan luvs2trvl
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,965
Galveston, TX
Refer to 1026.36(d)(1) - Comment 2(ii)
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#2115317 - 01/24/17 05:26 PM Re: Correspondent versus Brokered loan luvs2trvl
luvs2trvl Offline
100 Club
Joined: Apr 2013
Posts: 110
Texas
Thanks RC We were looking at the profitability to the company on the brokered side. Given what the broker fee received would be, less what we pay the LO's, we aren't sure our net take away would be worth it.

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