CFPB Rule Curbs Mortgage Brokers' Compensation

Law360, Washington (January 22, 2013, 6:00 PM EST) -- The U.S. Consumer Financial Protection Bureau issued new rules Sunday that could discourage mortgage lenders from issuing risky and high-cost loans by restricting incentive and compensation practices that encouraged brokers and loan officers to steer consumers toward the unsafe terms.

In particular, the new rules prevent lenders from setting employee compensation in accordance with loan terms, such as interest rates, fees or prepayment penalties, all of which may be higher in riskier loans. The bureau also nixed so-called “dual compensation” issues, in which loan originators could...
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