Comment on CFPB-2013-0002-0001

Alternative 2 would allow all consumer payments of up-front fees and points to offset creditor payments to the loan originator. Specifically, it would provide that § 1026.32(b)(1)(ii) requires a creditor to reduce the amount of loan originator compensation included in the points and fees calculation under § 1026.32(b)(1)(ii) by any amount paid by the consumer to the creditor and included in the points and fees calculation under § 1026.32(b)(1)(i). o In addition to Alternative 2, the Bureau should use its authority to exempt ALL lender-paid compensation on mortgage broker originated loans from the points and fees tests for purposes of TILA 129C. Indirect compensation to mortgage broker entities are fixed under the Federal Reserve Board's Loan Originator Compensation Rule (Now the Bureau's). The Congressional intent to prevent steering of consumers to higher cost mortgages for purposes of personal financial gain was met with the adoption of the FRB's LO Comp Rule, therefore making this section of the Dodd/Frank Act moot. The inclusion of lender paid compensation creates artificial market distortions and may lead to consumer confusion. Please refer to the 2004 FTC study which concluded the inclusion of YSP on Good Faith Estimates was harmful in that consumers were confused and not able to choose lower cost loans.