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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?

Sep 2, 2015

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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.”)

CFPB 2013 Loan Originator Rule Small Entity Compliance Guide (March 2015), page 19 (“Section 2.4, What loans does the rule cover? . . . The provisions on compensation . . . do not apply to: Open-end credit plans including HELOCs . . . .”