[tcranshaw]

Hello…
Our bank is struggling in lending to LMI individuals. Would it be kosher to offer higher bps or a set amount to lenders who originate loans that are made to lower income folks? It doesn’t seem to fit with the 7 allowable exceptions, but we would welcome other opinions.
Thanks!

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[jholzknecht]

The arrangement of players in your question is not clear. If your bank is compensating it own employees (lenders) the compensation rules in Section 1026.36 allow compensation so long as it is not based on the terms of the loan. For example a lender that makes a loan with a higher yield can not receive greater compensation than a lender than makes a loan with a lower yield. But the rules in 1026.36 do not prohibit higher compensation for a loan made to a LMI borrower.

Section 1024.14 of RESPA generally prohibits a referral fee to a third party. The regulation has seven exceptions where fees to third parties are permitted. The seventh exception works if you compensating your own employee and not a third party. If you are referring to rules other than 1026.36 or 1024.14 please clarify.

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