I just wanted
to point out that, despite the Official Comment regarding
compensation based on
loan type, the preamble
to the
Final LO Comp RuleFinal Rule (page 11326) states that
compensation based on the income of the borrower "would . . . typically be neither
compensation based on a term . . . nor . . .a proxy":
For similar reasons, compensation based on whether a consumer is a low-to moderate-income borrower would also typically be neither compensation based on a term of a transaction nor compensation based on a proxy for a term of a transaction. First, whether a consumer is a low-to moderate-income borrower would typically not be a term of a transaction. Income level is not a right or obligation of the agreement. Moreover, income level is not a fee or charge. The determination of whether a particular consumer fits the definition of a low-to moderate-income borrower would depend on that consumer’s income and the definition of low-to moderate-income pursuant to applicable government standards. With regard to the proxy text, credit extended to low-to moderate-income borrowers may tend to consistently have certain pricing or product features, but because a loan originator is typically unable to change whether a consumer is classified as a low-to moderate-income borrower, compensating based on this factor would not satisfy the second prong of the definition of a proxy.
https://www.govinfo.gov/content/pkg/FR-2013-02-15/pdf/2013-01503.pdfIt seems that
compensation based on whether a consumer is a low-
to moderate-income borrower would not present any additional risk
to an otherwise compliant
compensation program.
I assume the initial question may have related
to CRA credit. If so, I think the next question is whether there are other "characteristics" of loans that could help satisfy CRA obligations, but that likewise would not typically be based on a term or a proxy (likely based on the LO's inability
to change it). Any thoughts?