Fed Issues New Mortgage Disclosure and Compensation Rules

The U.S. Federal Reserve on Monday published a long list of new rules intended to protect consumers from what the central bank describes as “unfair, abusive, or deceptive lending practices.” The documents outline new requirements that will govern compensation to mortgage professionals and disclosures to borrowers regarding their home loans.

The Fed announced final rules prohibiting mortgage brokers and lenders’ mortgage loan officers from receiving compensation based on the interest rate or other loan terms – the practice commonly referred to as yield spread premiums, in which brokers and loan officers receive a bigger kick-back for steering borrowers to accept a higher interest rate than that required by the lender.

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