I am very confused on a scenerio that we have about MLO's and processors. We have a MLO that has a brokers license but is registered under our bank gets paid commission only on secondary mtg loans. Our bank gets 4% Lender paid, out of the 4% MLO gets 1%. The MLO also owns a mtg processing company that is used to process the loans. Processing Co receives $800.00 at closing. The MLO and the processor are the same person.
My first question - Does the mtg processing company fee need to be counted for High Cost Test? Wouldn't the company be an affiliate of bank?
Second - Does the 4% need to counted under high cost?
Third - Would the mtg processing company be considered third party and would we need to get all information on the company?
Also, would this be counted as the MLO getting paid by borrower and lender? Is that in compliance?
One more questions - is it OK that sometimes the lender paid is under and sometimes its over the 4%?
So confused, please help!

You need significant assistance from both legal and compliance consultants and your issue transcends the ability of most to opine without knowing many additional details of this arrangement.

For example, you mentioned this person has a broker's license also, are they also involved in the transaction as a real estate agent or what type of broker's license are you referring too??

It all sounds like a huge conflict of interest, one that a Bank should never allow to happen and needs to be resolved ASAP before the CFPB comes knocking on your door for RESPA and UDAAP violations.

The broker's license is a mortgage broker's license. Plus this person is registered with NMLS under our bank.