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Loan Originator Compensation -  

The Regulatory Examination

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Jonathan Foxx
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As you may know, I have written extensively on Loan Originator Compensation.

Indeed, my firm and I provide the FAQs Outline - Loan Originator Compensation, an on-going project that is currently at 425 Frequently Asked Questions and 132 pages in length.

I have now published an article about the anticipated Regulatory Examination that will be implemented by federal and state banking authorities.

It is entitled:

Loan Originator Compensation -
The Regulatory Examination

In the article, I outline appropriate examination guidelines and requirements, including the audit and review components, methodology, various scopes and modules, document and information requests, and the information questionnaire.

The article is published in the November 2011 edition of the highly regarded National Mortgage Professional Magazine.

I hope you enjoy reading the article.



As a courtesy exclusively to our subscribers, the Publisher is offering a complimentary one year free subscription to the magazine.


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The easy part is over. Now the real fun begins.
When April 6, 2011 arrived, the mortgage industry was still scrambling to understand the new loan originator compensation Final Rule (Rule), how to implement it across various origination channels, and, most importantly, how to integrate it into operational, logistical, and financial components.

Nevertheless, for months afterward the Rule continued to perplex and frustrate, particularly with respect to properly implementing disclosures and compensation plans. It still causes considerable consternation.

As we all know, generally there is no regulation issued - whether the statutes are at the federal or state level - that does not have a corresponding regulatory examination to assure enforcement.

And so it goes: on October 6, 2011 - exactly six months to the day when the Rule became effective - the first examination guidelines for loan originator compensation were promulgated.


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Expect the Unexpected

As I have said many times, preparation is protection. Don't wait for the regulator's Document Request letter to implement any regulatory requirement.  


If you wait, by then it's often too late. Remember, most examinations are look-backs, reaching to the previous examination, or a stated time frame previous to the current examination.  


Most examiners have a "No Tolerance" view of firms that cannot provide supporting documents and information in a timely manner. The "record speaks for itself" is the inflexible standard!  


Our audit and due diligence reviews are the property of our client, and as fully confidential as if the client conducted its own review, with its internal resources - which, of course, is certainly a viable option.  


So, there really is no excuse for not being prepared for a regulatory examination for loan originator compensation or any other examination.


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LENDERS COMPLIANCE GROUP is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of services in mortgage banking. We are pioneers in outsourcing solutions for residential mortgage compliance. We offer our clients real-world, practical solutions to mortgage compliance issues, with an emphasis focused on operational assessment and improvement, benchmarking methodologies, Best Practices, regulatory compliance, and mortgage risk management. We are pioneers in outsourcing solutions for mortgage compliance.


This communication is sent to our valued clients and colleagues, who regularly receive our Mortgage Compliance Updates, Compliance ALERTS, and Commentaries. These publications are free to subscribers.


Information contained in this email is not intended to be and is not a source of legal advice. The views expressed are those of the contributing author, as well as news services and websites linked hereto, and do not necessarily reflect the views or policies of Lenders Compliance Group (LCG), any governmental agency, business entity, organization, or institution. LCG makes no representation concerning and does not guarantee the source, originality, accuracy, completeness, or reliability of any statement, information, data, finding, interpretation, advice, opinion, or view presented herein.


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