The Federal Reserve System (Fed) has announced that it will host a webinar on March 17, 2011 to address questions about the Loan Originator Compensation rule that takes affect on April 1, 2011.  The webinar will take place at 11:00 AM Pacific Time (2:00PM Eastern).

Even though there has been multiple calls by industry groups to delay implementation of the rule, including two expected lawsuits, this move marks the latest indication that the Fed fully intends to move forward with the implementation of this rule as scheduled.


The announcement states that updated information and answers to questions will be provided by attorneys from the Board of Governors' Division of Consumer and Community Affairs.

Interested parties can register for this free event HERE.  Registered participants will be provided the opportunity to submit questions via email prior to the event, or with live chat during the event.

As an introduction to what the webinar will cover, the announcement included a brief overview of the major components of the final rule:

  • Prohibit payments to loan originators based on the loan's interest rate or other terms and conditions of the transaction, except the amount of credit extended.
  • Prohibit any person other than the consumer from paying compensation to an originator in a transaction where the consumer pays the loan originator directly.
  • Prohibit loan originators from “steering” consumers to consummate a loan not in their interest based on the fact that the loan originator will receive greater compensation for such a loan.
  • Provide a safe harbor to facilitate compliance with the prohibition on steering. A loan originator is deemed to comply with the anti-steering rule if the consumer is presented with loan options that include the following:

1. The lowest interest rate for which the consumer qualifies;
2. The lowest total dollar amount for points and origination fees, and
3. The lowest rate for which the consumer qualifies for a loan with no risky features, such as a prepayment penalty, negative amortization, or a balloon payment in the first seven years.

The intent of the webinar appears to be to review the compliance requirements of the new rule.  However, the presenters will likely be questioned on issues related to concerns raised by the various industry groups, as well as, the impacts of pending litigation by the NAIHP (filed on March 7th) and NAMB (expected to filed sometime in March).  It is quite possible that the presentation may stay focused on the goal of clarifying compliance, and moderation of the event may be steered away from questions about justification for the rule.