A local business is expanding its staff in the new future. Along with providing checking accounts to their new employees, we would like to cross-sell and offer any new employee a waiver of our origination up to $500 on any new mortgage loan from our secondary market. We fund our mortgages and our lenders receive income based on the dollar amount of mortage loans sold in the secondary market. This marketing arrangement will be shown as a $500 lender credit on the Closing Disclosures. As a loan originator organization, do we violate the proxy rules when we compensate our staff a commission based on loan amounts? Also does it matter if we arrange for a higher rate to compensate for our reduction in income?

I'm a little confused. You will offer a $500 lender credit, but arrange a higher rate for compensation?

[deleted because I misread the original post]

Possibly. But now that I ponder it more, if we were to arrange for a higher rate with the investor and thereby reducing the loan fees to a decree that they might be under $500, we should make sure the credit is a flat $500 for all loan and third-party fees (and not just up to $500); otherwise, we could face a UDAAP situation.

My main worry though is in some way this arrangement can be construed as compensation based in whole or in part on a factor that is a proxy for a term of a transaction when we compensate our lenders.