(a) Loan originator and mortgage broker defined.
(1) Loan originator. For purposes of this section, the term “loan originator” means with
respect to a particular transaction, a person who for compensation
or other monetary gain, or in expectation of compensation or other
monetary gain, arranges, negotiates, or otherwise obtains an extension
of consumer credit for another person. The term “loan originator”
includes an employee of the creditor if the employee meets this definition.
The term “loan originator” includes the creditor only if the creditor
does not provide the funds for the transaction at consummation out
of the creditor’s own resources, including drawing on a bona fide
warehouse line of credit, or out of deposits held by the creditor.
(2) Mortgage broker. For purposes of this section,
a mortgage broker with respect to a particular transaction is any
loan originator that is not an employee of the creditor.
(b) [Reserved].
(c) Servicing practices.
(1) In connection with a consumer credit
transaction secured by a consumer’s principal dwelling, no servicer
shall—
(i) Fail to credit a payment to the
consumer’s loan account as of the date of receipt, except when a delay
in crediting does not result in any charge to the consumer or in the
reporting of negative information to a consumer reporting agency,
or except as provided in paragraph (c)(2) of this section;
(ii) Impose on the consumer
any late fee or delinquency charge in connection with a payment, when
the only delinquency is attributable to late fees or delinquency charges
assessed on an earlier payment, and the payment is otherwise a full
payment for the applicable period and is paid on its due date or within
any applicable grace period; or
(iii) Fail to provide, within a reasonable
time after receiving a request from the consumer or any person acting
on behalf of the consumer, an accurate statement of the total outstanding
balance that would be required to satisfy the consumer’s obligation
in full as of a specified date.
(2) If a servicer specifies in writing
requirements for the consumer to follow in making payments, but accepts
a payment that does not conform to the requirements, the servicer
shall credit the payment as of 5 days after receipt.
(3) For purposes of this paragraph (c),
the terms “servicer” and “servicing” have the same meanings as provided
in 24 CFR 3500.2(b), as amended.
(d) Prohibited payments to loan originators.
(1) Payments based on transaction terms or conditions.
(i) In connection
with a consumer credit transaction secured by a dwelling, no loan
originator shall receive and no person shall pay to a loan originator,
directly or indirectly, compensation in an amount that is based on
any of the transaction’s terms or conditions.
(ii) For purposes of this paragraph
(d)(1), the amount of credit extended is not deemed to be a transaction
term or condition, provided compensation received by or paid to a
loan originator, directly or indirectly, is based on a fixed percentage
of the amount of credit extended; however, such compensation may be
subject to a minimum or maximum dollar amount.
(iii) This paragraph (d)(1) shall not
apply to any transaction in which paragraph (d)(2) of this section
applies.
(2) Payments by persons other than consumer. If any loan originator receives compensation directly from a consumer
in a consumer credit transaction secured by a dwelling:
(i) No loan
originator shall receive compensation, directly or indirectly, from
any person other than the consumer in connection with the transaction;
and
(ii) No person
who knows or has reason to know of the consumer-paid compensation
to the loan originator (other than the consumer) shall pay any compensation
to a loan originator, directly or indirectly, in connection with the
transaction.
(3) Affiliates. For purposes of this
paragraph (d), affiliates shall be treated as a single “person.”
(e) Prohibition
on steering.
(1) General. In connection with a consumer credit transaction secured by a dwelling,
a loan originator shall not direct or “steer” a consumer to consummate
a transaction based on the fact that the originator will receive greater
compensation from the creditor in that transaction than in other transactions
the originator offered or could have offered to the consumer, unless
the consummated transaction is in the consumer’s interest.
(2) Permissible transactions. A transaction does not violate paragraph
(e)(1) of this section if the consumer is presented with loan options
that meet the conditions in paragraph (e)(3) of this section for each
type of transaction in which the consumer expressed an interest. For
purposes of paragraph (e) of this section, the term “type of transaction”
refers to whether:
(i) A loan has an annual percentage
rate that cannot increase after consummation;
(ii) A loan has an annual percentage
rate that may increase after consummation; or
(iii) A loan is a reverse mortgage.
(3) Loan options presented. A transaction satisfies
paragraph (e)(2) of this section only if the loan originator presents
the loan options required by that paragraph and all of the following
conditions are met:
(i) The loan originator must obtain
loan options from a significant number of the creditors with which
the originator regularly does business and, for each type of transaction
in which the consumer expressed an interest, must present the consumer
with loan options that include:
(A) The loan with the lowest
interest rate;
(B) The
loan with the lowest interest rate without negative amortization,
a prepayment penalty, interest-only payments, a balloon payment in
the first 7 years of the life of the loan, a demand feature, shared
equity, or shared appreciation; or, in the case of a reverse mortgage,
a loan without a prepayment penalty, or shared equity or shared appreciation;
and
(C) The loan with
the lowest total dollar amount for origination points or fees and
discount points.
(ii) The loan originator must have a
good faith belief that the options presented to the consumer pursuant
to paragraph (e)(3)(i) of this section are loans for which the consumer
likely qualifies.
(iii) For each type of transaction, if the originator presents to
the consumer more than three loans, the originator must highlight
the loans that satisfy the criteria specified in paragraph (e)(3)(i)
of this section.
(4) Number of
loan options presented. The loan originator can present fewer
than three loans and satisfy paragraphs (e)(2) and (e)(3)(i) of this
section if the loan(s) presented to the consumer satisfy the criteria
of the options in paragraph (e)(3)(i) of this section and the provisions
of paragraph (e)(3) of this section are otherwise met.
(f) This section does not apply to a home-equity
line of credit subject to section 226.5b. Sections 226.36(d) and (e)
do not apply to a loan that is secured by a consumer’s interest in
a timeshare plan described in 11 U.S.C. 101(53D).
