Comment on CFPB-2012-0037-0049

Whether a loan is originated at a retail branch, wholesale channel or via a correspondent lender, the vast majority of loans are sold in the secondary market. This allows the lender to replenish their funds to continue funding new originations, providing the necessary liquidity for the mortgage market to function efficiently. The role of the MLO is significant in the mortgage market. It is the MLO that is in the front lines working with consumers to prequalify and structure a loan that meets the consumer’s financial needs while also meeting the investor guidelines required for the loan to be purchased once originated. There is no escaping the fact that the value (thus pricing) of originated loans (paper) is based on the future cash flows of the interest payments plus risk premium associated with early payoffs, credit risk and defaults. It makes no sense to prohibit the entities that originate these loans from participating in the inherent value of the loan itself to offset the costs and business risk of origination.