Generally, loan originators may not receive compensation, directly or indirectly, that is based on any term or condition of a mortgage transaction. Compensation based on a term or condition of a mortgage transaction includes additional compensation wrapped in the interest rate, loan-to-value ratio, prepayment penalties, as well as, more traditional compensation such as salaries, commissions and bonuses. Mortgage companies receive profits based on selling mortgages, however. Often times they fund their qualified profit sharing plan, 401(k) or employee stock ownership plans (together referred to as “qualified plans") with such profits.

Some mortgage companies determined that their loan originators could not participate in their qualified plans based on a conservative reading of Regulation Z. They understand that loan originators cannot receive additional compensation based on mortgage transactions, which they took to mean that loan originators could not receive qualified plan contributions from a pool of profits comprised of compensation from mortgage transactions. Effectively, loan originators could not participate in their mortgage employer’s qualified plans.

The Bureau released CFPB Bulletin 2012-02 to explain that loan originators can participate in their mortgage employer’s qualified plans. Employer contributions to a qualified plan, even when from a pool of compensation derived from mortgage transactions, will not be considered compensation based on a term or condition of mortgage transactions. And therefore, loan originators may participate in their mortgage employer’s qualified plans.

Non-qualified deferred compensation plans may be a different matter. The Bureau said each determination of compensation paid to a non-qualified deferred compensation plan is a highly fact intensive analysis and will have to be individually analyzed to determine whether non-qualified deferred compensation amounts are paid based on a term or condition of mortgage transactions. The Bureau hopes to issue more detailed regulations addressing qualified and non-qualified deferred compensation issues but, for now, qualified plan contributions may be paid to loan originators. Stay tuned.

Form 5500 Workshop and 401(k) Plan Workshop – May–June
Form 5500 Workshop – In addition to providing the line-by-line explanation of the forms and schedules, this year’s workshop will focus on troublesome filing issues and explain what questions and issues are an enforcement concern.

401(k) Plan Workshop – There’s been a recent flurry of activity by the DOL and IRS that will affect your retirement plan practice. Our 401(k) Workshop will keep you abreast and give you the tools you need to work effectively in the current environment. Topics include: fee disclosure regulations, multiple employer 401(k) plans, revised 404(c) rules, 401(k) plan compliance questionnaire, real estate and other unusual investments in a 401(k) plan, death and the 401(k) plan, 401(k) plan annuitization and other current developments.

Convenient back-to-back scheduling in all cities. Early and multi-program discounts available.
Attendees may earn up to 14 hours of CE credit by attending both programs.
Visit our Web site now for detailed information, dates/locations, and to register online.

Fundamentals of 401(k) and Other Qualified Plans – 6 Cities Only, June-July, Registration Open
Visit our Web site now for detailed information, dates/locations, and to register online.

Upcoming Web Seminars:
Affiliated Service Groups: How Well Do You Know Them? - May 1, 2:00 p.m. ET. Registration opens soon.
Nothing Exceeds Like Excess: Correcting Excess Amounts - May 15, 2:00 p.m. ET.
457(b) Plans for 401(k) Practitioners - May 30, NOTE the earlier start time: 12:00 noon ET.
Visit our Web site for more details and to register online.