When the RESPA changes went into effect, we implemented a process where the loan officer may lose some of their commission if there was a HUD-1 tolerance error. We don't enforce it on inadvertent errors but when something happens that the MLO should of known was wrong. With that being said, I listened to the FED's webinar on MLO compensation yesterday and that gave me the impression that we can't make the loan officers reimburse the bank for GFE/HUD errors because that violated the compensation rules.

My question it twofold: One, is that the way others are understanding it? And two, how are others handling the accountablility of an accurate GFE with their MLO's?

Yes, that is correct.

Now that said, while you cannot really and go and ding them for each occurance, you still may have some recourse with them. For instance, our LOs are commissioned based and earn XX bps for each thousand originated. We can change this amount paid based on several factors, including overall loan compliance.

We review quarterly, and if they persistent issues, the bank suffers from buybacks because of their errors, poor service levels, we rachet back their bps earned for the next quarter or longer, until these instances have improved.

Such a program though should not be willy-nilly nor retaliatory though, and should be designed and implemented with HR to ensure it is fair and reasonable, doesn't violate any labor or minimum wage laws, and is applied consistently to all sexes, and is throughly suported by evidence.

Thank!

need someones thoughts here! We have an MLO incentive program based on volume and complies with the MLO compensation rules. In addition, the MLO have an annual review process to determine their performance which determines there hourly raise for the next year. With the performance evaluation we have a criteria that states "Does not exceed 4 controlable pricing errors in a fiscal year". They either pass or fail and the outcome affects their overall score. Does anyone see a problem with this?

bump!

bump!

I don't. Everyone should be paid based on performance. I believe that's what you are doing: more errors = poor performance = correlation to pay.

I don't believe this violates the MLO Compensation rules.

Ditto.

Thanks! Sometimes you just need someone to agree with you!