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October 17, 2018The Honorable Mick MulvaneyActing DirectorBureau of Consumer Financial Protection1700 G Street, NWWashington, DC 20552Dear Acting Director Mulvaney,The undersigned member companies of the Mortgage Bankers Association urge the Bureau ofConsumer Financial Protection (BCFP or Bureau) to make changes to its Loan Originator Compensation(LO Comp) rule necessary to help consumers and reduce regulatory burden. Having recently concludedthe Request for Information process, the Bureau is likely considering various regulatory actions. Webelieve changes to the LO Comp rule should be the Bureau’s top priority.1The LO Comp rule causes serious problems for industry and consumers due to its inflexible prohibitionson adjusting compensation and its amorphous definition for what constitutes a proxy for a loan’s term orconditions. The rule harms the efficiency of the mortgage loan market by limiting lenders’ ability tocompete and consumers’ ability to shop. Three important changes could address these problems:1. Permit voluntary reductions by loan officers to their compensation in response to competition.This change would significantly enhance competition in the marketplace, benefiting lenders who cancompete for more loans and consumers who receive a lower cost loan offer. Currently a lender willbe forced to decide against making a loan if doing so is unprofitable due to the requirement to paythe loan originator full compensation for a discounted loan. For the consumer, the result is a moreexpensive loan or the inconvenience and expense of switching lenders in the midst of the process.Impeding shopping and discouraging price competition is directly contradictory to the stated aims ofthe Bureau’s Know Before You Owe / RESPA-TILA Integrated Disclosure rulemaking which seeksto encourage shopping and empower the consumer to negotiate.2. Allow reductions to compensation when the originator makes an error. Greater loan originatoraccountability will reduce errors and encourage compliance with regulatory requirements andcompany policy, leading to a safer, more transparent market for consumers. The present ruleprevents creditors from holding their employees financially accountable for mistakes or deviationsfrom company policy on a particular loan. This is contrary to the central statutory premiseunderlying the LO Comp rule — that compensation is the most effective way to incent loanoriginator behavior.3. Allow variable compensation for loans made under housing finance agency (HFA) programs.The LO Comp rule forbids varying compensation for different loan types or products, includingHFA loans. HFA programs are particularly important for underserved borrowers such as first-time1A more detailed discussion of specific changes to the LO Comp rule can be found in MBA’s response to the Bureau’s AdoptedRulemaking RFI.

homebuyers and low- to moderate-income families who often encounter difficulty accessing creditelsewhere. These programs provide much needed access to credit, often along with housingcounseling and financial education, encouraging responsible homeownership in a well-regulatedmanner. However, the robust underwriting, tax law-related paperwork, yield restrictions, and otherprogram requirements make HFA loans more expensive to produce. Covering these expenses isparticularly difficult given many HFA programs include limits on interest rates and fees.In addition to these changes, the Bureau should simplify the LO Comp rule. The rule broadly prohibitscompensation based on loan terms or proxies for terms while providing a short list of permissiblecompensation factors. The Bureau should explore ways to clarify the regulation, including byspecifying a clear “bright-line” list of impermissible compensation factors rather than the current vagueand complicated “proxy for a term” analysis.The ambiguous current framework encourages widely varying interpretations of the rule. This has theperverse effect of disadvantaging those companies that hew closest to the Bureau’s rule. Industry andconsumers would be better served with clear, easy-to-follow bright-line rules. The undersignedcompanies welcome the opportunity to discuss this letter through the Mortgage Bankers Association.Respectfully,Donn CostaEVP for Home Lending1st Security BankSamuel J CerratoPresident & FounderAcer Mortgage CompanyRobert WarnerPresidentAcopia Capital GroupJoe DiCriscioCEOAcre Mortgage & Financial, Inc.Tim GoodVenture PresidentAdvance Financial GroupRob LindstromOwnerALCOVA Mortgage LLCChris CopePresidentAllen Tate MortgageJamie Korus PearcePresidentAlliance Home LoansBob WexlerVice PresidentAllied Mortgage GroupDave RobertsMortgage Division PresidentAlpine Bank of ColoradoBill CasePresident & CEOAmerican Mortgage Service Co.Bill LowmanPresident & CEOAmerican Pacific MortgagePhil MahoneyPresident & CEOAmerican Security Mortgage Corp.Mark JonesCEO & Co-FounderAmeriFirst Home Mortgage

Eric GatesPresidentApex Home LoansPinchas KishExecutive Vice PresidentArk Mortgage, Inc.Tom FaughnanExecutive Vice PresidentAssociated BankJeff AllenCEOAssociated Mortgage CorporationKenny HodgesPresident & CEOAssurance FinancialTimur J. TunadorCEOAtlantic Coast MortgageKevin McDougalPresidentAugusta Mortgage CoJill GutierrezCEOBank 34Clark JohnsonPresident of Mortgage DivisionBank of ColoradoJanette MahChief Mortgage Banking OfficerBank of HopeKen IrvinMortgage Division ManagerBank of TennesseeKim NelsonCEOBankSouth MortgageLeo W. DunnChairmanBay Capital Mortgage CorporationPam WoodallPresidentBeach Community MortgageSteve RemingtonChief Operating OfficerBenchmark MortgageJoel C. StaehlingPresidentBlackRidgeBANKGreg ShumateCEOBrandMortgageMark A. FoxExecutive Vice President & COOC&F Mortgage CorporationTodd KurioPresidentCapStar Lending, LLCRaymond BrousseauPresidentCarrington Mortgage ServicesChristopher A. PurcellPresident of Home LendingCarrollton BankAdam ThorpeCEOCastle & Cooke MortgageSusan MeitnerPresident & CEOCentennial Lending Group, LLCEd WorkmanSenior Vice President for Mortgage LendingCentral Bank Mortgage

Marla GuillaumePresidentCentury Mortgage CompanyJim ClappPresidentCertainty Home LoansMarcy LindhoutSVP, Director of Mortgage LendingChemical BankJeff MayPresident & CEOCherry Creek Mortgage CoDavid ChristensenCEOChristensen Financial, Inc.Paula ReevesPresidentCIS Home LoansLisa H. AlbanyVice President, Real Estate DivisionCitadel Federal Credit UnionDaniel L. PerlCEOCitadel Servicing CorporationEd BrattonMortgage Market PresidentCity BankMike Klein, AMPVice PresidentCLM Mortgage, LLCChris GeorgePresidentCMG FinancialChristopher R. SpakerPresidentCNB Mortgage CompanyChris R LagerbladePresidentCNN MortgageJames MacLeodChairmanCoastal States BankJoseph A. SplendidoPresidentColonial Mortgage Service CompanyDavid MotleyPresidentColonial Savings, FAPam ThompsonVice PresidentCommonwealth Bank & TrustLaura RobertsCEOCommunity Mortgage FundingJon WhittingtonPresidentCompass Home Loans, LLCKim MehargVP of Human ResourcesCompass MortgageJohn Murphy, CMBVP of Mortgage ServicesConsumers Credit UnionJulie PiephoPresidentCornerstone Home LendingFowler WilliamsPresident & CEOCrescent Mortgage CompanyDouglas A SchukarPresident & CEODAS Acquisition Company

Taylor StorkSenior Vice PresidentDeveloper's Mortgage CompnaySonya LuechauerPresident & CEODHI Financial ServicesPaul V. DiamondPresident & CEODiamond Residential MortgageRon MillardChief Executive OfficerEnvoy MortgageChad NeissVP, Mortgage LendingEphrata National BankEdwin L. Rizor JrPresident & OwnerEquity Resources, Inc.Kate DeKayCEOEustis Mortgage Corp.David FloanExecutive Vice PresidentEvergreen Home LoansLen KrupinskiChief Operating OfficerFairway Independent Mortgage Corp.Joe NunziataCEOFBC MortgageMarc ElyChief Compliance OfficerFinance of AmericaTwila L. GroomsPresident/Manager of the General PartnerFirst Choice Lending Group, LPRonald J. NardisSenior Vice PresidentFirst Commonwealth BankTroy A. Fore Jr.President Mortgage LendingFirst Financial MortgageAaron SamplesPresidentFirst Guaranty Mortgage Corp.Alex WishCEOFirst Heritage Mortgage, LLCJoseph F. Bayer Jr.Executive Vice PresidentFirst Integrity Mortgage ServicesSohail HalaniOwnerFirst Option Mortgage, LLCRob HengerSVP, Director of Mortgage BankingFirstBankJudy M. DeHaroEVP and Chief Lending OfficerFirstLight Federal Credit UnionShawn Von TalgeVice PresidentFlat Branch Mortgage, Inc.Mark F. JohnsonPresident & COOFlorida Capital Bank, N.A.Andrew TaylorExecutive Vice PresidentFranklin American Mortgage CompanyBill LandonCEOGeorge Mason Mortgage

Adam J. MasonPresidentGershman MortgageKipp V. MyersPresident & CEOGraystone MortgagePaul W. PetersonSenior Vice PresidentGlacier Bancorp, Inc.Nik AthanasiouCOOGuaranteed Rate, Inc.Retta GardnerPresident & CEOGuaranty TrustMary Ann McGarryCEOGuild Mortgage CompanyPatrick M. SheehyPresident & CEOHamilton Group FundingVictor BrockS.V.P. Consumer and Mortgage LendingHawaii State FCUKen HickmanCEOHighlands Residential MortgageSuzanne SmithPresidentHNB MortgageClaudine ClausPresidentHome Financing CenterBrooks McDowellVP for Secondary Markets & Loan ServicingHome Savings BankGregory J. GrojeanDivision PresidentHome State Bank, N.A.Peter NordenCEOHomebridge Financial Services, Inc.Bill RogersCEOHomeowners Financial GroupBrad DimmigPresidentHomesale Mortgage, LLCGreg PappasSenior Vice President of Capital MarketsHomeside Financial, LLCMichael RappaportPresidentHomespire MortgageWesley HuntPresidentHomeStar Financial CorporationMichael G. RutherfordPresidentHomestead Funding Corp.Rich BennionExecutive Vice PresidentHomeStreet BankDayna McElreathPresidentHomeVantage MortgageMark D. SteeleChairman & CEOHoward Hanna Mortgage ServicesKevin LeibowitzPresident & CEOGrayton Mortgage, Inc.

Eric BradleyPresident & CEOHuron Valley Financial, Inc.Kathleen LewisExecutive Vice PresidentIdaho First BankNicholas J DelTortoCEOInlanta MortgageAdam R. HuddlestonPresident & CEOIntegrity Home Mortgage CorporationJosh RomneyChairmanIntercap Lending, Inc.Tom PynePresidentIntercoastal MortgageGene Thompson IIIPresident & COOInterLinc Mortgage Services, LLCPhil BuscemiPresident - Home Lending DivisionJ.G. Wentworth Home LendingThomas KishOwnerJMJ FinancialLarry BsharahPresidentJohn Adams MortgagePam WallaceVice Presdient of Mortgage LendingJonah Bank of WyomingStephen T. DiMarcoPresidentKey Mortgage ServicesGreg TallmadgePresidentKiel MortgagePamela RaeberPresident & OwnerKings Mortgage Services IncCameron MottVice Presdient of Mortgage LendingKS StateBankEric BurgoonChief Lending OfficerLake Michigan Credit UnionJack ThompsonPresident & CEOLegacy MortgageTania OliveroChief Compliance OfficerLegacy Mutual MortgageScott FlahertyCEOLendSmart MortgageWesley HoaglundCEOLenox Financial Mortgage Corp.Jeff WalshChief Operating OfficerLoanDepotMike BaldwinFounderLoanStarDon Calcaterra, Jr.PresidentLocal Lending GroupKenneth FriendCEOLong Grove Mortgage Bancorp