State Mortgage Regulators Release Mortgage Loan Originator Compensation Guidelines


WASHINGTON, D.C. – October 17, 2011 – (RealEstateRama) — The Multi-State Mortgage Committee (MMC), a ten-state representative body created by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR), has issued examiner guidelines as a tool for consistent implementation of the Federal Reserve Board’s final rules for closed-end credit under Regulation Z. The rule introduced loan originator compensation restrictions to protect consumers against the unfairness, deception, and abuse that can arise with certain loan origination compensation practices. The rule generally prohibits payments to loan originators based on loan terms and conditions, dual compensation to originators by consumers and any other person, and “steering” consumers to loans to receive greater compensation.

“The guidelines are intended to assist state regulators of non-depository mortgage loan originators and creditors in their review of licensee policies and practices for compliance with the Federal Reserve Board’s final rule,” said Darin Domingue, Deputy Chief Examiner of the Louisiana Office of Financial Institutions and President of AARMR. “The guidelines developed by the MMC provide examiners in the field with a standardized set of procedures for evaluating basic compliance with the rule. Utilization of these guidelines will facilitate more consistency among state regulators when implementing their own policies and procedures to ensure compliance with the rule.”

In developing the guidelines, which apply to residential mortgage loans, the MMC conducted extensive industry outreach to solicit feedback. “By reaching out to industry for their comments and by making the guidelines public, state regulators are increasing the transparency of mortgage supervision,” said John Ryan, President and CEO of CSBS. “State mortgage regulators must ensure compliance with the final rule developed by the Federal Reserve, but we want to do so in a way that protects consumers while creating greater certainty and limiting regulatory burden for those providers we regulate.”

The MMC guidelines may be downloaded here.

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Catherine Woody, Senior Director of Communications, or 202.728.5733
Rockhelle Johnson, Manager of Communications, or 202.407.7156

The Conference of State Bank Supervisors (CSBS) is the nationwide organization of banking regulators from all 50 states, the District of Columbia, Guam, Puerto Rico, and the Virgin Islands. State banking regulators supervise over 5,600 state?chartered financial institutions. Further, the majority of state banking departments also regulate a variety of non-bank financial services providers, including mortgage lenders. For more than a century, CSBS has given state supervisors a national forum to coordinate supervision of their regulated entities and to develop regulatory policy. CSBS also provides training to state banking and financial regulators and represents its members before Congress and the federal financial regulatory agencies.

The American Association of Residential Mortgage Regulators (AARMR) is the national organization representing state residential mortgage regulators. AARMR’s mission is to (a)promote the exchange of information between and among the executives and employees of the various states who are charged with the responsibility, pursuant to the laws of the individual states, for the administration and regulation of residential mortgage lending, servicing and brokering; (b) assist in resolving conflicts of jurisdiction in relation to mortgage lending, servicing, and brokering; (c) promote a better understanding of mortgage regulation; (d) develop model legislation applicable to the administration and regulation of mortgage lending, servicing and brokering; (e) increase the knowledge and ability of those engaged in the administration and enforcement of mortgage regulation and those engaged in mortgage lending, servicing or brokering by organizing and sponsoring lectures, seminars, and training programs and by providing a forum for the exchange of information; and (f) do everything necessary, proper, advisable or convenient for the accomplishment of the Corporation’s purposes and goals.


Conference of State Bank Supervisors
1129 20th Street, NW, 9th Floor, Washington, DC, 20036

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