Zealous EVP earns big bonuses for being a big bank promoter – LO Comp restriction concerns?

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Question:

Our Executive VP earns a substantial annual bonus. He doesn’t really do any real estate lending, but he certainly talks with many bank customers (often on the golf course) about how the bank can provide various loan solutions, including 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. Tune into the upcoming webinar “MLO, LO, or Neither?” for help and insight into such situations.

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