Changes to the Federal Reserve Board’s controversial loan originator compensation rule will likely be made by January 2013, according to statements made today by Richard Cordray, chief of the Consumer Financial Protection Bureau, which now has authority over the rule.
The changes are likely to allow originators to lower their compensation in order to close a home purchase, HousingWire reported following a congressional hearing Thursday.
Cordray, speaking before a House Financial Services Committee panel, said changes to the rule should be in place by 2013 and that the bureau has the ability to adjust the rule, according to the report.
A bill introduced by Rep. Gary Miller (R-Calif.) would allow a loan originator to reduce his or her compensation by up to 30% in order to reduce closing costs to the borrower. Under the current rule, originators are unable to absorb those costs.
Rep. Miller. speaking at the Thursday hearing said the bill would not allow originators to raise costs at the last minute.
“Would your bureau take these ideas into consideration?” he asked Cordray, according to the HousingWire report.
“On its face, it sounds fairly sensible I would say,” Cordray said.
Earlier this week, the bureau’s head of mortgage markets spoke of plans to reexamine the rule and issue a new proposal.
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Written by Elizabeth Ecker
