Comment on CFPB-2012-0037-0049

Eliminating compensation payments that are based on loans terms because of a premise that such payments “potentially give an incentive to MLOs to provide consumers loans with higher interest rates or other less favorable terms”; completely ignores the fact that mortgage loans are originated in a very competitive marketplace and that consumers are provided with more information and disclosures detailing their loan’s terms than ever before. The fact of the matter is that these restrictions in effect prohibit MLOs from pricing a loan, thus, creating an environment of fixed pricing that is decoupled from loan origination cost and loan origination business risk. The result is more and more scenarios where the cost to originate a loan exceeds the revenue that the loan generates, creating a disincentive for MLOs and Loan Origination Organizations to originate loans with low loan amounts or loans that require additional time and resources to structure and process. Pricing restrictions will always result in scarcity as fewer businesses will be willing, or even able, to assume all the overhead, staffing and business risk to offer a product with little to no margin (a loss for low or complex loans).