CHLA renews LO comp reform calls, urges other changes
Four priority areas
CHLA’s letter centered on four areas: TILA-RESPA Integrated Disclosure (TRID) modernization, Qualified Mortgage points-and-fees revisions, risk-based supervision for smaller independent mortgage banks, and restricting loan originator compensation rules to transactions between firms.
On TRID, CHLA proposed a bona fide financial emergency waiver letting consumers voluntarily skip waiting periods during genuine emergencies. The group also called for moving government-imposed charges, such as recording fees and transfer taxes, into the 10% cumulative tolerance category rather than the current zero-tolerance framework, arguing lenders cannot predict changes made by government offices. CHLA separately asked the bureau to move lender-provided third-party services into a category with no tolerance limit.
On Qualified Mortgage rules, CHLA proposed removing the 2% cap on bona fide discount points when a governmental or nonprofit provider funds them through a deferred, non-interest-bearing subordinate lien. The group said assistance dollars applied to rate buydowns cut payments roughly twice as much as the same dollars applied to principal, citing an example where $20,000 in principal reduction cut payments by $131 a month, versus $256 for discount points.
Supervision and compensation
CHLA renewed its call for the CFPB to implement Dodd-Frank Section 1024 through genuinely risk-based supervision of smaller independent mortgage banks, arguing the statute has never been explicitly applied to nonbank lenders. It sought an exemption from routine exams comparable to one already available to smaller banks.
On loan originator compensation, CHLA argued restricting the rule to compensation between firms would prevent harms including fewer small-dollar mortgages and difficulty matching competitors’ offers.
