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The day you have dreaded has arrived. You have to go home and face your spouse and children about an event that just happened, that will profoundly affect your livelihood. Your mortgage license has been suspended or revoked, and because there is pending litigation you will no longer have the ability to originate loans for a mortgage company or a bank.

“How did this happen, you’re asked? I thought you checked with the company you work for and they said the way they were paying you was correct?” “They did”, you respond; yet as you explain you realize your participation in the conduct makes you liable as well as the company.

This is about to become a true story for many originators as the CFPB heats up their regulation. One may conclude that the loan originator doesn’t have to worry about all of this compliance stuff, because it’s the company’s problem not theirs. All of that is in the past, and as originators you are also responsible for your participation in the conduct. Generally when I speak I hear “well none of the loan originators at Castle & Cook were affected, just the company”. While that is true, there is a reason for this. At the time of this settlement the CFPB was not legally able to affect the originators as the law to do that was not in effect. Therefore, it didn’t happen. The Law is Alive and Well now! I can assure you that there are several cases pending, which will quickly send a shock wave through the industry very shortly. It’s my hope that none of you are the fall guys/gals for this lesson in individual responsibility.

It seems that each day I hear about loan originators getting recruited to companies that are clearly violating LO compensation rules, fair lending rules or other new regulation. This leaves those companies who choose to do things correctly in a position of losing producers to others who lie (whether overtly or inadvertently) to the mortgage originator.

Loan originators take note. If you are working for a company who is not in compliance you will be held responsible; and it may cost you a career that has provided you with a great lifestyle! In today’s regulatory environment an originator must be as well informed about the regulation as the compliance professionals, and using the reasoning of “they told me it was okay when they hired me” will not protect you.

Originators, you are your own protection. Dig down deep into the “sales pitch” others are giving you and do your due diligence.

I would appreciate any posts to this article (without naming company names) where you see originators leaving to go to a company that is clearly in violation of regulation. What are they telling them to get them to go? What should the originators look out for? Let’s make this an educational awareness post and help those who may not know or warn those who should know better.

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

More posts by Tammy Butler, Master CMB

Join the discussion One Comment

  • Interesting. As far as I understand it your pay can not be based on the terms of the loan just volume or hourly. We call them KPI= Key Performance Indicators. Units per month, Total dollar amount, hours worked and number of funded loans.

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