QUESTION
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?
ANSWER
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.”
Brennan Holland
Director/Legal & Regulatory Compliance
Lenders Compliance Group
