CFPB: Loan originators can partake in 401(k) plans
The Consumer Financial Protection Bureau says Regulation Z of the Truth in Lending Act does not prohibit loan originators from partaking in qualified 401(k) or employee-stock ownership plans.
The CFPB released that report to clarify concerns since the rule prohibits originators from receiving loan compensation that stems from terms or conditions built into the loan.
CFPB said, "The Fed staff had informally advised that profits were considered a proxy for loan terms or conditions, thereby raising concerns about the legality of loan originator participation in qualified plans funded with mortgage lender profits. Apparently, the FDIC had informally taken the position that the compensation rule prohibited the participation of loan originators in qualified plans."
But CFPB released a report to ensure loan originators know financial firms can make contributions to qualified plans for loan originators out of profits derived from loans originated by employees.