The Consumer Financial Protection Bureau is focusing on a possible loophole that its qualified mortgage rules have possibly created for lenders.
More lenders have entered the mini-correspondent business since the QM rules took effect on Jan. 10. "The CFPB is concerned that some mortgage brokers may be shifting to the mini-correspondent model under the mistaken belief that identifying themselves as such would automatically exempt them from important consumer protection rules affecting broker compensation," according to a report the agency released on July 11.
The CFPB has published guidance on how it evaluates mortgage transactions involving mini-correspondent lenders, confirming who must comply with the broker compensation rules, regardless of the way they describe their business structure. The bureau plans to closely monitor mini-correspondent practices, including former mortgage brokers that converted to this form.