On July 11th, the CFPB issued guidance regarding mortgage brokers transitioning to a “mini-correspondent” lender model. The CFPB is concerned that some mortgage brokers may be shifting to the mini-correspondent model in order to exempt them from consumer protection rules affecting broker compensation.
The guidance sets out how the Bureau evaluates mortgage transactions involving mini-correspondent lenders. This evaluation involves examining how the mini-correspondent lender is structured and operating, for example: whether it is continuing to broker loans; its sources of funding; whether it funds its loans through a bona fide warehouse line of credit; its relationship with its investors; and its involvement in mortgage origination activities such as loan processing, underwriting, and making the final credit approval decision.
Read more here.
Read the guidance here.
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