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?
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Opinions expressed are my own and do not reflect legal advice or the opinions of my employer.