EVP is a big loan promoter – concerned about his annual bonus being compliant with Reg Z

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Question:

I work in HR, and know that our Executive VP earns a substantial annual bonus. He does not really do any real estate lending, but often says he makes more loan deals on the golf course than anywhere else. I assume this includes home loans. Up to this point, he has kept his NMLS ID # and registration current “to CYA”. I’m concerned his bonus may be non-compliant with Loan Originator Compensation requirements. Should I be worried?

Answer:

Yes, you are right to be concerned. Reg Z’s Loan Originator Compensation Rules at 1026.36 have strict compensation restrictions on “mortgage-related profits”. If your institution makes money from consumer real estate lending, then your EVP is indirectly earning a bonus based on those profits. His bonus amount is limited if he is a Loan Originator, and his hobnobbing salesmanship likely falls in that category… not to mention the appearance of him keeping registration as a Mortgage Loan Originator. This is a tricky situation.

Learn about the specific compensation requirements in the “Reg Z and SAFE Act Refresher: MLO / LO” webinar on Wednesday, April 17, 2024

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Learn more about Rebekah Leonard's Reg Z and SAFE Act Refresher: MLO / LO webinar.