Loan Originator Compensation Rule

The Loan Originator Compensation Rule is designed to prevent mortgage lenders and brokers from incentivizing loan officers to steer borrowers toward certain loans that might benefit the lender financially, rather than what's best for the borrower. It restricts how much a loan officer can be paid, especially limiting commissions based on loan amount or terms, to promote fairer and more transparent lending practices. Ultimately, the rule aims to align the interests of loan originators with the needs of borrowers, ensuring that loan decisions are made based on what’s suitable rather than solely on potential profits.