As follow-up to a story we published Aug. 17, 2012 about loan originator compensation, the Consumer Financial Protection Bureau (CFPB) has issued a new proposal which gives management more control of pricing, and prohibits loan originators from leading borrowers into higher cost or higher risk loans as a means to increase their compensation. The CFPB wants lenders to offer a “zero-zero option” which allows potential borrowers to see the full interest rate and total closing costs of a mortgage so they can more easily compare it to other options. As nationalmortgagenews noted, CFPB Director Richard Cordray said, “Consumers have a hard time comparing loans when they are dealing with a bewildering array of points and fees. We want to provide consumers with clearer options and enable them to choose the loan that they believe is right for them.” In addition, under the revised proposal, senior managers would not be considered loan originators if they originated five or fewer loans in the last 12 months. The public comment period is open until Oct. 16. MHProNews has learned the CFPB intends to finalize the proposal after the first of the year.
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