FDIC Header
Skip Header

Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Directors' Resource Center
Technical Assistance Video Program

Loan Originator Compensation Rule

  1. Introduction
  2. LO Comp Rule Purpose, Coverage and Overview; “Loan Originator” and “Compensation” Defined
  3. Loan Originator Compensation Based on Loan Terms or Proxies Is Prohibited; Exceptions for Profits-Based Compensation
  4. Other Compensation Aspects of the Rule; Record Retention Requirements and Required Policies and Procedures
  5. Building an Effective Compliance Management System (CMS) for the LO Comp Rule; Presentation Recap and Resources

I. Introduction
This segment introduces the Loan Originator Compensation Rule (LO Comp Rule) Video as one of three FDIC videos covering compliance with the mortgage rules issued by the Consumer Financial Protection Bureau (CFPB).  This video series is designed for community bank compliance officers, to help facilitate compliance with these rules.  The LO Comp Rule Video brings a special focus on those provisions of the rule of particular interest to community banks.

Approximate run time 04:02

 

Link to YouTube Video

Presentation Materials - PDF


II. LO Comp Rule Purpose, Coverage and Overview; “Loan Originator” and “Compensation” Defined
Segment two highlights the major components of the LO Comp Rule and reviews the rule’s most basic requirement:  for any loan that is a covered transaction, no loan originator can receive and no person can pay to a loan originator, directly or indirectly, compensation in an amount that is based on terms of transactions (or proxies for terms) either of a single loan originator or multiple loan originators.  As part of this review, the segment examines:  what loans are covered by the rule; who is and who is not a “loan originator” for purposes of the rule; and what constitutes “compensation” under the rule.

Approximate run time 23:54

 

Link to YouTube Video

Presentation Materials - PDF


III. Loan Originator Compensation Based on Loan Terms or Proxies Is Prohibited; Exceptions for Profits-Based Compensation

Segment three delves into the rule’s compensation provisions in depth, focusing primarily on the prohibition against loan originator compensation based on loan terms or proxies for loan terms.  This segment examines what are loan terms under the rule and how to analyze whether a factor that is not a loan term may be a “proxy” for a loan term.  This segment also examines the rule’s exceptions allowing for certain profits-based compensation; community banks may find these exceptions of particular benefit to their mortgage lending operations.

Approximate run time 18:34

 

Link to YouTube Video

Presentation Materials - PDF


IV.  Other Compensation Aspects of the Rule; Record Retention Requirements and Required Policies and Procedures

Segment four examines the permissibility of pricing concessions and the practices of dual compensation and steering.  This segment also reviews the rule’s record retention requirements and its requirement to establish and maintain written policies and procedures.

Approximate run time 09:36

 

Link to YouTube Video

Presentation Materials - PDF


V. Building an Effective Compliance Management System (CMS) for the LO Comp Rule; Presentation Recap and Resources

This segment focuses on what institutions could consider when building and maintaining an effective compliance management system for the LO Comp Rule, and offers some practical tips for ensuring compliance.  The segment then closes out the LO Comp Rule video presentation by briefly reviewing the topics covered and highlighting those aspects of the rule that should prove helpful to community banks.  Finally, this segment lists resources to consult for additional information about the LO Comp Rule.

Approximate run time 08:49

 

Link to YouTube Video

Presentation Materials - PDF


Skip Footer back to content