WASHINGTON The Consumer Financial Protection Bureau issued guidance Friday aimed at stopping mortgage brokers from evading compensation rules by hiding under the cloak of a "mini-correspondent" lender.
A growing number of brokers have rebranded themselves as mini-correspondent lenders so they can fund loans off warehouse lines and close in their own names. But many critics say the mini-correspondent model is often used simply to avoid CFPB restrictions on broker compensation. Under one regulation, lenders must disclose how much they pay brokers. Meanwhile, the bureau's recent "Qualified Mortgage" rule includes broker compensation in the points and fees that are capped at 3% of the loan amount.