Legal Blog

Compensation and Compliance Matters – November 8, 2013

Can I pay differently between banked/brokered loans?

The answer is it depends.  Assuming that the loans you broker are niche products only used in the event there is not banked product available, then yes you could have a different compensation structure then funded loans.  Of course, you would clearly need written policies ensuring there was no possibility that borrowers could be steered into brokered loans and ensure that self-funded loan scenarios did not keep with brokered scenarios.   On the other hand, if a banker wants to broker all FHA loans and self-fund conventional products, one could see the obvious competition and potential that brokering could be used as a proxy for loan terms.   Ultimately, when determining whether it is permissible to compensate differently between self-funded and brokered loan the issue is whether under the circumstances the distinction creates a proxy for loan terms or the ability to steer borrowers between brokered and banked loan terms. Read more on National Mortgage News.