NAMB: Loan Officer Compensation Rules Threaten Small Businesses

The ""Consumer Financial Protection Bureau's"":http://www.consumerfinance.gov/ (CFPB) new rules on loan originator compensation will inevitably raise prices for consumers and harm small business, according to the ""National Association of Mortgage Brokers (NAMB)."":http://www.namb.org/Default.asp

[IMAGE]

""It seems that every part of these rules imposed by the CFPB are intended to make it increasingly difficult for small businesses to operate,"" Donald J. Frommeyer, NAMB president, said of the new compensation rules and the qualified mortgage rule.

[COLUMN_BREAK]

Frommeyer said the majority of the 10,579 mortgage brokers in the United States have five employees at most, and a large portion of the commission they receive on loans goes to paying overhead to operate their business.

The new qualified mortgage and compensation rules are ""the perfect way to eliminate smaller business operations from the marketplace,"" which will lead to decreased competition and ultimately higher prices for consumers, according to NAMB.

""This is the very opposite of the CFPB's purpose,"" Frommeyer said.

Loan officer compensation generally ranges from 1.5 percent to 3 percent of the loan amount. The type of loan affects how much the loan officer receives.

Under the ""CFPB's new rules,"":https://themreport.com/articles/cfpb-announces-rules-to-reform-originator-compensation-2013-01-18 however, loan officers may not be compensated based on the terms of a loan.

According to CFPB Director Richard Cordray, the new rules eliminate a conflict of interest in which loan officers benefit from persuading consumers to take on riskier loans.

However, NAMB insists the rules unfairly impact small brokers, which are ""an integral part of America.""