Recently the Consumer Finance Protection Bureau (CFPB) called into question RPM Mortgage’s interpretation and execution of rules regarding loan originator compensation during 2011, 2012 and 2013. As mentioned in the company’s statement, there were no allegations of harm to the company’s customers in the filed complaints. We reviewed our pricing in 2011-2013 and confirmed that RPM’s rates were always competitive and, for the majority of its loans, matched or beat the average rates in RPM’s markets of northern and southern California.
And yet, RPM and I have agreed to settle with the CFPB without admission of wrongdoing. The settlement will become final when entered by the court. Why take this route instead of fighting the CFPB in court? The decision was not an easy one but, at the end of the day, I felt it was better to move forward and focus solely on the needs of our customers.
As for our adherence to the LO Comp rules both then and now, RPM has always and will continue to hold itself accountable to the rules put before us by all of our regulators. Our current regulatory law firm, Buckley Sandler, extensively reviews RPM’s LO comp policy every six months to ensure that RPM is in accordance with the current directives from the CFPB. Unfortunately for our entire industry, 2010 was the beginning of challenging times regarding the specifics of loan originator compensation. Dave Stevens, President of the Mortgage Bankers Association, said it best in a statement regarding the matter:
“The rule at play here – the Loan Originator Compensation rule – was originally issued by the Fed in 2010 and then taken over by the CFPB in the wake of Dodd Frank. The rule has long been a subject of industry confusion because of its broad and prescriptive reach into the smallest details of lender compensation plans and the lack of clear guidance on how to comply.”
Stevens continues, “In fact, MBA repeatedly asked for clarification from the Fed, and later the CFPB, on some of the very same issues that are the subject of this complaint. Eventually, in 2014, the CFPB amended the rule and provided some additional guidance. However, the Bureau appears now to be applying those amendments retroactively.”
Given what unfolded with PHH and the CFPB, I am confident that putting this behind us and moving forward is the best decision for our company and our customers.
You can click Statement from Dave Stevens, President of MBA to read Stevens’ full statement here.