Currently, our bank refers all mortgage apps to a secondary market lender. We only originate the loan. We don’t fund it. The bank receives an origination fee and our LO receives an bonus based on total dollar amount of secondary market loans closed. The bank does not offer a bonus for in-house mortgage loans.
Could this be considered steering? We’re referring them to the secondary market because we can receive an origination fee and we don’t have to fund the loan.
Also, would we have to give them loan options for secondary market loans and for in-house loans before we can make the referral?
I agree there are steering concerns. In order to negate those you would need to present the applicant with loans options for each type of transaction (fixed rate, variable/adjustable rate, or reverse mortgage) in which they expressed an interest.
You can find what needs to be presented as part of the loan options in 1026.36(e)(3).