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Under the mortgage loan originator compensation (MLO) rules, can we award commissions for a HELOC based on the initial draw amount, without taking into account any subsequent draws? – IBA Compliance Connection

IBA Compliance Connection

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Under the mortgage loan originator compensation (MLO) rules, can we award commissions for a HELOC based on the initial draw amount, without taking into account any subsequent draws?

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Yes, you may award commissions for a HELOC based on the initial draw amount. Regulation Z’s MLO compensation rules do not apply to HELOCs, as they apply only to closed-end consumer credit transactions secured by a dwelling.

For resources related to our guidance, please see:

  • Regulation Z, 12 CFR 1026.36(b) (The MLO compensation rules in “Paragraphs (d) through (i) of this section apply to closed-end consumer credit transactions secured by a dwelling.”)