What law is LO Comp covered under?

The Loan Originator Compensation (LO Comp) rule is covered under the Truth in Lending Act (TILA). This regulation was established to ensure that compensation practices for loan originators are transparent, fair, and do not result in unfair lending practices.

The LO Comp rule specifically addresses how loan originators can be compensated and prohibits certain forms of compensation that may lead to conflicts of interest, such as payment based on the terms of the loan itself. This is essential in protecting consumers from potentially harmful lending practices and ensuring they are treated fairly when obtaining loans.

While other laws such as the Consumer Financial Protection Bureau (CFPB) do oversee and enforce regulations related to consumer financial products, including TILA, it is the specifics of TILA that directly apply to the compensation of loan originators. The Real Estate Settlement Procedures Act (RESPA) deals with other aspects of settlement services and consumer protections but does not specifically cover originator compensation. The Federal Housing Administration (FHA) primarily oversees housing programs and does not directly address the compensation structure for loan originators.