I have a corporate loan officer that is going to be helping a branch loan officer to close loans, how can the corporate loan officer be compensated?
The corporate loan officer will need to be compensated on the same structure as the branch loan officer (i.e., bps or flat fee but must be the same) and pay should be divided based on percentage of work actually performed.
[12 CFR 1024.14(c)]
This division should be set out in the compensation agreements for each of the loan officers with notation of the actual tasks to be completed by each; and make clear that each loan officer will receive the same compensation for each of the loans jointly worked. In no event shall the referral of jointly worked loans be based on the terms of the loan or a proxy for the terms. [12 CFR §1026.36(d)] No incentive should exist for a loan officer for steering a borrower to a jointly worked loan.
Here are relevant citations.
12 CFR 1024.14(c) provides:
“No split of charges except for actual services performed.
“No person shall give and no person shall accept any portion, split, or percentage of any charge made or received for the rendering of a settlement service in connection with a transaction involving a federally related mortgage loan other than for services actually performed. A charge by a person for which no or nominal services are performed or for which duplicative fees are charged is an unearned fee and violates this section. The source of the payment does not determine whether or not a service is compensable. Nor may the prohibitions of this part be avoided by creating an arrangement wherein the purchaser of services splits the fee.”
12 CFR §1026.36(d)(1) provides:
“PAYMENTS BASED ON A TERM OF A TRANSACTION.
- “Except as provided in paragraph (d)(1)(iii) or (iv) of this section, in connection with a consumer credit transaction secured by a dwelling, no loan originator shall receive and no person shall pay to a loan originator, directly or indirectly, compensation in an amount that is based on a term of a transaction, the terms of multiple transactions by an individual loan originator, or the terms of multiple transactions by multiple individual loan originators. If a loan originator's compensation is based in whole or in part on a factor that is a proxy for a term of a transaction, the loan originator's compensation is based on a term of a transaction. A factor that is not itself a term of a transaction is a proxy for a term of the transaction if the factor consistently varies with that term over a significant number of transactions, and the loan originator has the ability, directly or indirectly, to add, drop, or change the factor in originating the transaction.”
Director/Legal & Regulatory Compliance
Lenders Compliance Group