Revisiting this practice but looking at it specifically through the TILA LO Comp lenses. This seems like it would be prohibited under the rule but I am having some trouble with this compensation being based on the term or a proxy for the terms. That and the commentary says that compensation could consider the long term performance of the originators loans. I seem to recall something in the Fed's original commentary spelling out that this wasn't intended to mean it could be considered on a loan by loan basis but I don't see that mentioned anywhere in the current commentary.....although I may be missing it.
Regardless, I would be interested to hear others views on this and, if prohibited, how it fits into terms or proxies for terms?
Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.