On Tuesday, The CMLA met with the CFPB to discuss the Loan Officer Compensation Rule and its effect on midsize and small lenders.
In attendance for the CMLA were Kim Curtis, Board Chair of the CMLA and President and CEO of Tidewater Home Funding, David Horne, Legislative Representative for CMLA, and Ed Wallace, Executive Director of CMLA.
We presented Jennifer Stockett, Deputy Assistant Director, Mark McArdle, Assistant Director, Mortgage Markets & Regulations, and Derek Standarowski, Policy Analyst with copies of our letter dated November 14, 2018 to Acting Director, Mick Mulvaney outlining the negative impact on midsize and small lenders resulting from the Rule.
Specific incidences were provided which allowed the CFPB to fully understand if changes are not made within a short window of time, severe ramifications will take place with continued concentration of midsize and small lenders through consolidation and closures, underserved markets, and less competitiveness in the market which are all counter-intuitive of the Dodd-Frank Act.
The CFPB stated the Loan Officer Compensation Rule is under consideration but, will take as long as 18 to 24 months to complete. We strongly recommended that the CFPB immediately act on the items that currently have consensus: (1) Reduction in Loan Officer compensation for mistakes and (2) Adjustments to Loan Officer Compensation for HFA loan programs.
They could then, request comment regarding the final item, voluntary reduction by loan officers due to competition. This would provide some immediate relief to midsize and small lenders and enable them to continue to compete with large banks and brokers and thus retain the viability of their companies.
In addition to Loan Officer Compensation, we provided copies of our letter dated May 21, 2018 to Monica Jackson of the CFPB, regarding risk-based oversight of IMBs which is already in Dodd-Frank. We again strongly expressed our desire to have this statute immediately implemented which will also allow midsize and smaller companies relief already granted by the statute.
