CFPB Issues Loan Compensation Rule To Prevent Steering Into Costlier Mortgages

The Consumer Financial Protection Bureau issued a final rule Jan. 18 designed to block mortgage brokers and loan officers from steering borrowers into costlier products to boost their compensation.

The final rule bans compensation that is based on interest rates, a prepayment penalty, higher fees or other loan terms. It also prohibits “dual compensation,” in which a broker or loan officer who receives compensation directly from the consumer also receives compensation from the lender or another party.

“Congress specified that loan originators should be motivated by proper incentives,” CFPB Director Richard Cordray said during a Jan. 18 conference call with ...