The Mini-Correspondent Channel: Pros and Cons

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Several years ago, our firm, Lenders Compliance Group, provided unique guidance to the mortgage division of a bank. The bank wished to build a special origination platform for its mortgage brokers. At that time, the prevailing regulations required disclosure of the Yield Spread Premium (YSP), and the bank wanted to give their Third Party Originators (TPOs) an opportunity to close in their own name, with their own funds, and, among other things, by-pass disclosure of the YSP. In building the platform for the bank, many features were needed to implement these relationships in accordance with federal and state law, as well as safety and soundness metrics. This all took place at a time when a 3% fee cap on broker revenue was not even a glimmer in the eyes of legislators or regulators, and Elizabeth Warren had yet to promote the creation of the Consumer Financial Protection Bureau (CFPB).

As Shakespeare wrote in The Tempest, “What’s past is prologue.”

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The Mini-Correspondent Channel - Pros and Cons

TWO CLASSES OF QUALIFIED MORTGAGES

QUALIFIED MORTGAGE AND THE 3% CAP

THE MINI-CORRESPONDENT CHANNEL

MINI-CORRESPONDENTS: A GOOD DEAL?

MINI-CORRESPONDENTS AND THE CFPB

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