The LO Compensation Rule Compliance


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The Loan Officer Compensation (LO Comp) Rule was introduced by the Federal Reserve (Fed) on August 16, 2010.  It was transferred as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act to the Consumer Financial Protection Bureau (CFPB) for enforcement. Dodd-Frank was signed into law by President Barack Obama on July 21, 2010, and the LO Comp Rule was part of the regulatory reforms introduced by this legislation.

The LO Comp Rule became effective on April 6, 2011, and it aimed to address certain compensation practices in the mortgage lending industry that were considered harmful to consumers. Its primary focus was on regulating how loan officers and mortgage professionals are compensated to protect consumers from potential conflicts of interest and predatory lending practices. The rule was designed to promote transparency, fairness, and ethical conduct within the mortgage lending industry.