While marketing services agreements caused a stir during the second half of 2015, the mortgage industry has a more pressing issue at hand: loan officer compensation. The Consumer Financial Protection Bureau’s deputy assistant director for originations announced recently that the agency would focus its exams on loan officer compensation in 2016. Also mentioned as focal points are the Truth-in-Lending/Real Estate Settlement Procedures Act integrated disclosures and Ability-to-Repay rules. The bureau will be auditing in retrospect — in other words, engaging in backward-looking audits — and giving little leeway or grace period after the effective date of the respective regulations. Ultimately, lenders of all sizes should pay careful attention to these remarks. State regulators often take cues from the CFPB and it is likely that the CFPB’s agenda will be replicated at the state level. Notably, if a lender has historically had compliance problems, a potential enforcement action can be greatly mitigated if a lender self-identifies and corrects deficiencies prior to discovery by a regulator.
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Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide. Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.
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