The Consumer Financial Protection Bureau (CFPB) issued guidance regarding mortgage brokers transitioning to a “mini-correspondent” lender model. The CFPB said it is concerned that some mortgage brokers may be shifting to the mini-correspondent model under the mistaken belief that identifying themselves as such would automatically exempt them from consumer protection rules affecting broker compensation.
The guidance describes how the bureau evaluates mortgage transactions involving mini-correspondent lenders. It explains who must comply with the broker compensation rules, regardless of how they may describe their business structure.
“Before the financial crisis, consumers seeking mortgages were steered toward high-cost and risky loans that were not in the consumer’s interest,” said CFPB Director Richard Cordray. “The CFPB’s rules on mortgage broker compensation are intended to protect consumers from this type of abuse. We are putting companies on notice that they cannot avoid those rules by calling themselves by a different name.”
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