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Proposed Third-Party Processing and LOA Compensation
Mortgage Case Scenario: Can an Unlicensed Wholesale Account Executive Receive an LOA and Third-Party Processing Comp?
- Mortgage Case Scenario Help Desk
- Topic: Mortgage Compliance, Loan Officer Assistant Compensation, Third-Party Processing, RESPA, and Licensing
Mortgage Industry Case Scenario Question
I work as a producing branch manager at a national mortgage brokerage. I have several years of experience originating residential mortgage loans and regularly work with wholesale lenders and independent third-party mortgage processing companies.
Recently, I reconnected with a wholesale mortgage team I have worked with for several years. The account executive is knowledgeable about mortgage underwriting, loan processing, challenging borrower situations, and the operational side of mortgage origination.
The account executive understands my business model and how I handle complex mortgage transactions. They have helped me get some of the more difficult files through underwriting and closed.
I want to set up a formal working arrangement with the account executive, our branch assistant, and an independent third-party mortgage processing company.
However, I want to ensure that the proposed compensation arrangement complies with both federal and state mortgage rules.
Proposed Third-Party Mortgage Processing Arrangement
Our brokerage uses an independent third party for contract processing.
- The required processing fee will be disclosed on the Loan Estimate, as regulations require.
- In the proposed arrangement, the independent processor would pay the wholesale account executive $500 per loan for extra processing support services.
- The account executive would then pay my branch assistant $100 from that amount for work completed on the same file.
- Both would provide administrative support, help with outstanding documentation, coordinate processing conditions, and assist with communication between all parties involved.
- These arrangements would apply only to mortgage files that I personally originate.
Proposed Loan Officer Assistant Compensation
Separately, I would like both of you to help me with loan officer assistant work on the loans I originate.
I am proposing an additional 25 basis points in compensation, to be paid from the branch’s own allocation or P&L.
This compensation would be split equally: Assistant: 12.5 bps.
- Wholesale Account Executive: 12.5 bps.
- Total proposed LOA compensation: 25 bps.
- For example, on a $400,000 mortgage loan, 25 basis points equals $1,000.
- Each person would receive $500 in compensation as a loan officer assistant.
- This compensation would be in addition to the third-party processing fee arrangement.
The Licensing and Employment Question
The wholesale account executive is not a licensed mortgage loan originator but works as an account executive at a wholesale mortgage company.
- The wholesale company has apparently approved the account executive’s proposed outside involvement.
- However, our mortgage broker’s management and compliance team would also need to review and approve the arrangement.
- My understanding is that an unlicensed person can perform some administrative, clerical, and loan processing work, as long as it stays within the limits of relevant regulations.
- The main issues are whether the individual could be compensated and whether the proposed structure would create any licensing or conflict-of-interest concerns.
Questions for Mortgage Compliance Professionals
- Can an unlicensed wholesale mortgage account executive carry out admin or LOA work for a separate mortgage broker whilst still being employed by the wholesale lender?
- Can an independent third party mortgage processing company pay the account executive $500 per loan for actual bona fide processing services performed?
- Can the account exec then pay another assistant $100 for work actually done on the file?
- Can an unlicensed LOA receive 12.5 bps per closed loan from the producing branch manager’s compensation or branch P&L?
- Would a fixed per-file fee, hourly rate, or salary be more appropriate than basis point compensation?
- Should the Account Executive be onboarded as a W-2 employee, an independent contractor or an approved third party service provider? Would a Form 1099 and invoice be adequate?
- Are there any RESPA Section 8, Regulation Z, SAFE Act, state licensing or loan originator compensation issues with receiving both processing comp and LOA comp on the same mortgage transaction?
- Does working for the wholesale lender who is funding the transaction create an additional conflict of interest (even if both companies would approve the arrangement)?
- What safeguards (in the form of written agreements, disclosures and compliance approvals) should be in place prior to any payment being made?
My goal is not to bypass mortgage licensing or compensation rules. I want to set up a proper, transparent arrangement that pays experienced mortgage professionals for their actual work and fully complies with all relevant laws. I appreciate feedback from mortgage compliance officers, wholesale lending executives, licensed mortgage professionals, and third-party processing companies with experience in similar arrangements.
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4 Replies
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Mortgage Case Scenario: Can an Unlicensed Wholesale Account Executive Receive LOA and Third-Party Processing Compensation?Mortgage Industry Case Scenario Question
I work as a branch manager at a national mortgage brokerage. I have many years of experience originating residential mortgage loans and regularly work with wholesale lenders and independent third-party processing companies.
Recently, I reconnected with a wholesale mortgage team I worked with before. Their account executive is very knowledgeable about underwriting, loan processing, handling tough borrower situations, and the operations side of mortgage originations.
- The account executive understands my business model, knows how I handle complex mortgage transactions, and has helped move challenging files through underwriting to closing.
- I want to establish a formal working arrangement among this account executive, my branch assistant, and an independent third-party processing company.
- However, I need to ensure the proposed compensation plan complies with all federal and state mortgage regulations.
Proposed Third-Party Mortgage Processing Arrangement
- My brokerage works with an independent third-party processing company.
- The processing fee would be shown on the Loan Estimate as required by regulations.
- In this arrangement, the independent processing company would pay the wholesale account executive $500 per loan for extra processing support.
- The account executive would then pay my branch assistant $100 from that amount for work done on the same file.
- Both would provide administrative support, help with documentation, coordinate processing conditions, and keep communication flowing between all parties.
- These arrangements would only apply to the mortgage files I originate myself.
Proposed Loan Officer Assistant Compensation
Separately, I want both individuals to help me with loan officer assistant tasks on the loans I originate.
- I am proposing an extra 25 basis points in compensation, paid from my branch’s compensation or profit-and-loss account.
Compensation Would be Divided Equally:
- Branch assistant: 12.5 basis points.
- Wholesale account executive: 12.5 basis points.
- Total proposed LOA compensation: 25 basis points.
- For example, on a $400,000 loan, 25 basis points is $1,000. Each person would get $500 as LOA compensation.
- This payment would be separate from the third-party processing fee arrangement.
The Licensing and Employment Question
- The wholesale account executive does not have a mortgage loan originator license but works for a wholesale mortgage company as an account manager.
- The wholesale company has reportedly approved the account executive’s involvement in this arrangement.
- However, my mortgage brokerage’s management and compliance team would also need to review and approve this arrangement.
- I understand that an unlicensed person can perform certain administrative, clerical, and loan-processing tasks as long as they remain within the limits set by regulations.
- The main issue is determining how the individual may be legally compensated and whether the proposed structure raises any licensing or conflict-of-interest concerns.
Questions for Mortgage Compliance Professionals
- Can an unlicensed wholesale mortgage account executive perform administrative or LOA services for a separate mortgage brokerage while remaining employed by the wholesale lender?
- Can an independent third-party mortgage processing company pay the account executive $500 per loan for bona fide processing services actually performed?
- Can the account executive then compensate another assistant $100 for documented work performed on the file?
- Can an unlicensed LOA receive 12.5 basis points per closed loan from a producing branch manager’s compensation or branch P&L?
- Would a fixed per-file fee, hourly compensation, or salary be more appropriate than basis-point compensation?
- Should the account executive be onboarded as a W-2 employee, independent contractor, or approved third-party service provider? Would a Form 1099 and invoice be sufficient?
- Are there RESPA Section 8, Regulation Z, SAFE Act, state licensing, or loan originator compensation issues with receiving both processing compensation and LOA compensation on the same mortgage transaction?
- Does working for the wholesale lender funding the transaction create an additional conflict of interest, even if both companies approve the arrangement?
- What safeguards, written agreements, disclosures, and compliance approvals should be established before any compensation is paid?
My goal is not to get around mortgage licensing or compensation rules. I want to create a clear, legal arrangement that pays experienced mortgage professionals for real work while staying fully compliant with the law.
I would appreciate feedback from mortgage compliance officers, wholesale lending executives, licensed mortgage professionals, and third-party processing companies with experience in similar situations. LOA Compensation, Third-Party Processing Fees, and Wholesale Lender Conflicts of Interest
Answer
An unlicensed mortgage assistant may perform certain administrative and clerical duties without obtaining a mortgage loan originator license. However, the proposed arrangement raises significant compliance questions because the individual is simultaneously employed by a wholesale mortgage lender and would receive compensation for services performed on mortgage loans originated by a separate brokerage.
The arrangement should not proceed without written approval from both companies and a detailed review by the mortgage brokerage’s compliance department.
The biggest concerns involve SAFE Act licensing requirements, RESPA Section 8, loan originator compensation rules, independent contractor classification, conflicts of interest, and potential duplicate compensation for the same services.
The proposed compensation amounts are not automatically illegal. However, merely identifying payments as processing fees, bonuses, or LOA compensation does not establish that they are permissible.
Can an Unlicensed Wholesale Account Executive Perform LOA Duties for a Mortgage Brokerage?
Possibly, but the distinction between administrative duties and mortgage loan origination activities is critical. Under Regulation Z, certain administrative and processing activities generally do not make an individual a loan originator.
These may include collecting borrower documentation, organizing loan files, coordinating processing deadlines, requesting missing paperwork, and providing routine loan status updates.
However, an unlicensed individual generally cannot independently perform activities that require an MLO license, such as offering or negotiating loan terms or assisting borrowers with loan selection in a manner that constitutes loan origination.
The specific responsibilities matter more than the employee’s job title.
A wholesale account executive who performs these functions for another company must also consider their existing employer’s policies, confidentiality obligations, and conflicts of interest.
Reference: CFPB Regulation Z, 12 CFR § 1026.36
Can a Third-Party Processing Company Pay an Unlicensed Individual $500 Per File?
This presents one of the most significant concerns in the scenario. The SAFE Act distinguishes between supervised employee processors and independent contractor processors. Under federal law, independent contractors performing covered residential mortgage loan processing or underwriting activities generally must hold the required state MLO license.
Consequently, an unlicensed individual cannot simply be designated an independent contractor and paid $500 per file for activities that fall within the covered definition of mortgage processing.
The parties must first determine exactly what services the individual would perform, who would supervise those services, whether the individual is an employee or independent contractor, and which states’ regulations apply.
There may be administrative services that do not trigger licensing requirements, but describing actual loan processing work as administrative support does not eliminate the issue.
Reference: SAFE Act, 12 U.S.C. § 5103
Can the Account Executive Pay Another Assistant $100 From the Processing Fee?
Potentially, but only if the underlying arrangement is lawful and the payment is for legitimate, documented services.
RESPA Section 8 prohibits referral fees and the splitting of settlement service charges, except as permitted for actual services performed.
The compliance department should determine whether the assistant is providing a separate service, whether the proposed compensation is reasonably related to its value, and whether the arrangement involves any direct or indirect referral compensation.
For example, a $100 payment for legitimate administrative services is different from a $100 payment made simply to direct business to a particular processing company or wholesale lender.
The assistant’s employer must also authorize the outside payment arrangement, and applicable employment, tax, and licensing requirements must be satisfied.
Can an Unlicensed LOA Receive 12.5 Basis Points Per Loan?
This question requires careful analysis. A 12.5-basis-point payment equals 0.125% of the loan amount. On a $400,000 loan, that would be $500. The fact that compensation is calculated in basis points does not, by itself, establish that the recipient must be licensed. However, compensation based on funded loan amounts can create regulatory concerns, particularly when the services resemble origination or referral activities.
A compliance department must consider the individual’s actual duties, the applicable state rules, whether the compensation is contingent on closing, and whether Regulation Z’s loan originator compensation requirements apply.
For purely administrative duties, a fixed salary, hourly wage, or appropriately structured administrative bonus may be easier to evaluate than a basis-point arrangement. However, fixed-fee compensation is not automatically compliant either.
The safest starting point is to define the job duties and employment relationship first, then establish compensation that complies with those responsibilities.
Should the Account Executive Receive a 1099 or Become a W-2 Employee?
A Form 1099 does not eliminate mortgage licensing requirements. If an individual is properly classified as an independent contractor, their actual processing activities may trigger SAFE Act licensing requirements that would not apply to a qualifying supervised employee.
A W-2 employee performing only permissible clerical and administrative duties under appropriate supervision may be subject to a different licensing analysis.
The correct classification also depends on federal and state employment and tax rules. The companies should not select W-2 or 1099 status solely because one option is easier for paying compensation.
Can Someone Receive Both Processing Compensation and LOA Compensation?
There is no universal rule that every payment for two separate categories of legitimate work is prohibited. However, in this scenario, receiving $500 for processing services plus 12.5 basis points for LOA services on the same loan creates a substantial need for documentation and compliance oversight.
The parties would need to demonstrate that the services are genuinely distinct, actually performed, properly valued, and not duplicative.
They would also need to establish that the recipient is eligible to perform each service and receive each payment. RESPA Section 8 prohibits unearned settlement service fee splits and payments for referrals. Regulation Z imposes separate requirements concerning loan originators and their compensation.
A payment arrangement must satisfy all applicable rules, not merely one.
Reference: CFPB Regulation X, 12 CFR § 1024.14
Does Employment With a Wholesale Lender Create a Conflict of Interest?
Potentially, yes. A wholesale account executive typically represents the interests of their wholesale lending employer. Receiving additional compensation tied to loans submitted by a mortgage brokerage raises questions about independence, preferential treatment, referral incentives, and the allocation of responsibilities.
Even if the account executive’s employer approves the arrangement, the mortgage brokerage must independently evaluate it.
Both companies should examine whether the compensation could influence lender selection, pricing, loan submissions, underwriting communications, or other aspects of the transaction. The individual must also comply with confidentiality requirements, authorized access controls, and restrictions on borrower information.
Does Disclosing the Processing Fee on the Loan Estimate Make the Arrangement Legal?
No. Accurate disclosure is necessary, but disclosure alone does not authorize an otherwise prohibited compensation arrangement. A processing fee appearing on the Loan Estimate does not cure a RESPA violation, licensing problem, or improper payment split.
The actual fee treatment, recipient, and disclosure requirements must be reviewed in accordance with applicable mortgage disclosure rules.
Reference: CFPB Loan Estimate Requirements, 12 CFR § 1026.37
What Is the Best Way to Structure a Compliant Arrangement?
Before implementing this type of arrangement, the mortgage brokerage and wholesale lender should jointly establish the permissible scope of services.
A potentially simpler alternative would be to keep the wholesale account executive in their existing lender-facing role while hiring or assigning a separately supervised administrative assistant through the mortgage brokerage.
Another possibility is to use a properly licensed and approved independent processing provider for covered processing activities, while employing an unlicensed assistant solely for permitted administrative duties. Any proposed compensation plan should have a clearly documented business purpose, appropriate supervision, independent review of licensing requirements, and written approval. The companies should also ensure that borrower data is accessible only to authorized personnel and that the payment structure does not incentivize referrals or the selection of preferred lenders.
Final Thoughts
This scenario shows a common challenge in the mortgage industry. Loan officers often need more help than traditional contract processing companies offer. Experienced account executives and administrative professionals can add value, but their roles must be structured around the work they perform, their regulatory status, and their relationship with each company.
Before starting any arrangement with third-party processing fees, LOA compensation, and wholesale lender employees, get a written opinion from qualified mortgage compliance counsel for the relevant states and activities. The first step should be to set up a legal service structure, then decide on payment methods. Experienced professionals should be paid for real work, but convenience cannot substitute for proper licensing, compensation, and compliance with conflict-of-interest rules.
Disclaimer:
This case scenario is provided for educational discussion. It is not a legal opinion or authorization to implement the described arrangement. Federal and state requirements may differ depending on the specific activities, employment relationships, loan programs, and jurisdictions involved. This discussion can attract mortgage loan officers, branch managers, contract processors, wholesale account executives, and compliance professionals nationwide. It focuses on an important question: How can mortgage professionals pay unlicensed administrative support without breaking licensing, RESPA, or loan originator compensation rules?
consumerfinance.gov
§ 1026.36 is part of 12 CFR Part 1026 (Regulation Z). Regulation Z protects people when they use consumer credit.
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So is it legal or not?
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Bottom Line: Is the Proposed Arrangement Legal?
As currently structured, I would not consider the arrangement legally cleared or safe to implement. There are substantial licensing, RESPA, and conflict-of-interest concerns.
That does not mean Account Executive cannot help with your mortgage files or that every proposed payment is illegal. It means the arrangement needs to be restructured and approved before payments begin.
Here is my assessment of the specific components:
- The wholesale account executive receiving $500 per file from the third-party processing company: Potentially prohibited if she is an unlicensed independent contractor performing regulated mortgage processing activities.
- Account Executive paying your assistant $100 per file: Potentially permissible for actual, documented services, but not automatically lawful merely because the services were performed.
- AE receiving 12.5 basis points from your branch P&L: Not automatically illegal, but raises serious concerns about compensation tied to loan volume, closing, and possible referrals.
- Assistant receiving 12.5 basis points as an LOA bonus: Potentially permissible, depending on her duties, employment classification, state law, and the company’s compensation policy.
- AE working simultaneously as a wholesale lender account executive and receiving payments connected to your loans: A significant conflict-of-interest and RESPA compliance concern, even with her employer’s permission.
My recommendation is not to pay AE through either proposed arrangement until mortgage compliance counsel has approved the exact structure in writing.
How I would make it compliant
I would pursue this structure:
- Keep AEs wholesale account executive duties separate from paid services for your branch, unless both employers approve the outside work and conflicts can be resolved.
- Have assistant compensated directly by Coast 2 Coast under an approved employee compensation plan for permitted LOA activities.
- Keep regulated third-party processing with properly licensed personnel, where required. Federal SAFE Act rules specifically restrict unlicensed independent contractors performing covered processing work.
- U.S. Code
- If AE is to receive additional compensation, have counsel determine whether her duties can be limited to administrative services and whether an employee or vendor arrangement is legally available.
- Do not split referral fees or duplicate services. RESPA permits bona fide compensation for services actually performed, but prohibits kickbacks and unearned fee splitting.
My final verdict
No—not as an arrangement I would authorize today. The facts provided do not establish that every component is unlawful, but they are insufficient to establish that the combined arrangement is legal.
The biggest obstacle is AE’s proposed dual role as an unlicensed wholesale account executive and as a paid mortgage-processing/LOA support provider.
You may be able to preserve much of the working relationship through a different employment and compensation structure.
The decisive next step is a written compliance determination based on AE’s exact duties and the states where the loans are originated.
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Mortgage Case Scenario: How Can an Unlicensed Wholesale Account Executive Legally Receive Processing and LOA Compensation?
Anonymous Mortgage Branch Manager’s Question
I am a producing branch manager of a national mortgage brokerage company. I originate my own mortgage loans and work closely with an experienced Wholesale Account Executive who has helped me with complicated mortgage scenarios, underwriting conditions, and loan approvals for many years.
My Wholesale Account Executive is extremely knowledgeable about mortgage guidelines, loan processing, underwriting, and resolving difficult mortgage conditions. The Wholesale Account Executive is not a licensed mortgage loan originator.
I also have My Assistant, who helps me with loan officer assistant duties, borrower documentation, administrative responsibilities, and loan processing coordination.
I want to establish a legal and compliant compensation structure involving My Assistant, Wholesale Account Executive, and an independent third-party mortgage processing company.
Here Is My Proposed Arrangement
1. Third-Party Processing Compensation
I use an independent third-party mortgage processing company that charges a processing fee disclosed on the Loan Estimate.
The proposed arrangement is for the third-party processing company to pay the Wholesale Account Executive $500 per loan for actual services performed.
Wholesale Account Executive would then pay My Assistant $100 from that $500 for additional administrative work.
2. Loan Officer Assistant Compensation
I also want My Assistant and Wholesale Account Executive to provide administrative and LOA support on mortgage loans that I personally originate.
I Propose Paying 25 Basis Points From My Branch P&L, Divided as Follows:
- My Assistant: 12.5 basis points.
- Wholesale Account Executive: 12.5 basis points.
- Total: 25 basis points.
For example, on a $400,000 mortgage loan, My Assistant would receive $500 and Wholesale Account Executive would receive $500 in LOA compensation.
This compensation would be separate from the third-party processing arrangement.
My Compliance Concerns
Wholesale Account Executive is currently employed by a wholesale mortgage lender and has received permission from management to participate in additional mortgage-related support activities.
However, I understand my mortgage brokerage must independently determine whether the arrangement is permissible.
I want to avoid any problems involving RESPA Section 8, the SAFE Act, Regulation Z, mortgage licensing, independent contractor classification, or conflicts of interest.
My Questions
- Can Wholesale Account Executive legally receive $500 per file from a third-party processing company while remaining employed by a wholesale lender?
- Can Wholesale Account Executive legally pay My Assistant $100 for administrative services performed?
- Can I pay My Assistant 12.5 basis points from my branch P&L for LOA duties?
- Can I pay Wholesale Account Executive 12.5 basis points from my branch P&L for additional LOA services?
- Would Wholesale Account Executive need to become a W-2 employee, independent contractor, or approved service provider of my brokerage?
- Would invoicing the brokerage and receiving a Form 1099 be sufficient, or are there additional licensing and compensation requirements?
- How would you structure this arrangement to ensure it is legal and compliant while fairly compensating everyone for legitimate work?
I am looking for practical guidance from mortgage compliance professionals, branch managers, wholesale lending executives, and third-party processors.
My objective is simple: I want my Assistant and Wholesale Account Executive to receive appropriate compensation for actual services performed without violating federal or state mortgage regulations.
Mortgage Compliance Answer: How I Would Legally Structure This Arrangement
I would not implement the proposed payment arrangement as written. However, I would restructure it so that My Assistant can be compensated for legitimate administrative services while the Wholesale Account Executive continues to provide lender-side support.
The objective is to clearly separate the three relationships: the mortgage brokerage, the independent third-party processor, and the wholesale lender.
1. My Assistant: Compensation Through the Mortgage Brokerage
- I would have My Assistant formally employed or otherwise properly engaged by the mortgage brokerage under an approved compensation agreement.
- My Assistant would perform permissible administrative and clerical duties, including collecting documentation, following up on outstanding conditions, organizing mortgage files, coordinating with processors, and providing routine status updates.
- I would propose compensating My Assistant through the brokerage’s payroll system, using an approved salary, hourly wage, or bonus structure.
- The original 12.5-basis-point proposal could be submitted for compliance review.
- If it does not satisfy applicable requirements, I would replace it with an approved compensation method.
- My Assistant would not negotiate interest rates, recommend loan products, or perform other activities requiring an MLO license.
2. Wholesale Account Executive: Keep the Existing Wholesale Lender Relationship
- I would have the Wholesale Account Executive remain employed by the wholesale mortgage lender and continue to receive compensation from that employer.
- Wholesale Account Executive could continue to provide standard lender-side assistance, including explaining wholesale lending guidelines, assisting with lender communications, escalating underwriting conditions, and coordinating lender-side resolutions.
- I would not have the third-party processing company pay the Wholesale Account Executive $500 per file.
- I would also eliminate the proposed 12.5-basis-point LOA payment to the Wholesale Account Executive on loans handled through that individual’s wholesale employer.
- This avoids creating an additional financial relationship that could raise questions involving referral compensation, employer conflicts of interest, and duplicate payments.
3. Third-Party Contract Processing Company
- I would continue using the independent third-party processing company for the mortgage processing services covered under its contract.
- The company would charge legitimate processing fees and assign appropriately authorized personnel to perform the work.
- I would eliminate the proposed arrangement under which the processing company pays the Wholesale Account Executive $500, and the Wholesale Account Executive subsequently pays My Assistant $100.
- Instead, each service provider would receive compensation directly through its own approved employment or contractual arrangement.
- This creates a cleaner separation of responsibilities and reduces the risk of improper fee splitting.
4. What If I Still Want to Compensate Wholesale Account Executive Separately?
- If I wanted the Wholesale Account Executive to perform additional work outside normal wholesale account executive responsibilities, I would first seek written approval from both companies and mortgage compliance counsel.
- I would require a written description of the proposed duties, confirmation that the services do not require an MLO license or any other unheld authorization, a review of the employment classification, and an assessment of conflicts of interest and RESPA compliance.
- I would not assume that submitting invoices, receiving a Form 1099, or obtaining employer approval makes the arrangement lawful.
- If the proposed duties constitute covered independent contractor loan processing, applicable SAFE Act licensing requirements would have to be satisfied.
5. Can My Assistant Receive 25 Basis Points Instead?
- I would consider reallocating the original proposed 25-basis-point LOA budget entirely to My Assistant, provided the mortgage brokerage’s compliance department approves that compensation formula.
- For a $400,000 loan, 25 basis points would equal $1,000.
- However, the brokerage would need to confirm that My Assistant’s actual duties, employment relationship, compensation conditions, and applicable state requirements support that arrangement.
- I would not automatically assume a basis-point bonus is lawful merely because My Assistant performs clerical duties.
Final Thoughts
The most practical structure is to have My Assistant provide dedicated borrower and loan-file administrative support through the mortgage brokerage, Wholesale Account Executive continue representing the wholesale lender, and the independent third-party processing company handle its contracted processing responsibilities.
This preserves the working relationship without introducing unnecessary payment arrangements among the three parties.
Before implementing the compensation plan, obtain written approval that addresses licensing, employment classification, state restrictions, RESPA, and Regulation Z. The goal is to compensate for legitimate work through clearly documented, authorized relationships rather than creating overlapping compensation streams.
The federal rules supporting this approach are the SAFE Act, RESPA Section 8 regulation, and Regulation Z § 1026.36.
Bottom line for forum readers: The proposed payment arrangement should not be implemented. The simpler alternative is to compensate My Assistant through the brokerage, compensate the Wholesale Account Executive through the wholesale lender, and keep independent processing fees with the authorized processing provider. This is a lower-risk proposal for compliance approval, not an automatic legal safe harbor.
uscode.house.gov
12 U.S.C. § 5103: License or registration required
12 U.S.C. § 5103: License or registration required
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