Wondering if this would be in violation of the Loan Originator Compensation Rules.
Our bank would like to start giving our junior loan officer some kind of commission.
The fee income we earn from our portfolio loans is less than the fee income we earn from the loans we sell on the secondary market. We generally charge the same fees to the customer for both.
I know that we get in trouble if we give commission based on anything other than loan amount. We were wondering if we could pay a lower rate/loan amount for portfolio loans in comparison to those we sale on the secondary market.
Keep in mind, this could encourage the loan officer to steer the borrower to the secondary market, but that would be in the best interest of the customer, as the rate is lower/fixed (whereas our portfolio loans are higher/variable).
We are considering a flat fee per loan or a fee based on loan amount. Again, our concern is that we would like to set up different flat fees per type–secondary market vs. portfolio loan. The loan officer would make more money if they sent them to the secondary market, but we can’t think of a scenario where this would not be in their best interest.
Having different scales for different types of loans sounds like a bad idea to me. Keep in mind that steering is also part of the MLO Compensation changes that went into place. I can easily see where this could be viewed as setting your lenders up for steering customers. I know I sure would hate to have to prove to a regulator that each time a customer choose the type of loan that gave the MLO more compensation that it was in the best interest of the customer.
To my knowledge there is not a requirement to have this as a separate policy.