Creating incentives for small dollar loan originators

(a) Definitions In this section: (1) Director The term Director means the Director of the Bureau of Consumer Financial Protection. (2) Small dollar mortgage The term small dollar mortgage means a mortgage loan having an original principal obligation of not more than $100,000 that is— (A) secured by real property designed for the occupancy of between 1 and 4 families; and (B) (i) insured by the Federal Housing Administration under title II of the National Housing Act (12 U.S.C. 1707 et seq.); (ii) made, guaranteed, or insured by the Department of Veterans Affairs; (iii) made, guaranteed, or insured by the Department of Agriculture; or (iv) eligible to be purchased or securitized by the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association. (b) Requirement regarding loan originator compensation practices Not later than 270 days after the date of enactment of this Act, the Director shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on loan originator compensation practices throughout the residential mortgage market, including the relative frequency of loan originators being compensated— (1) with a salary; (2) with a commission reflecting a fixed percentage of the amount of credit extended; (3) with a commission based on a factor other than a fixed percentage of the amount of credit extended; (4) with a combination of salary and commission; (5) on a loan volume basis; (6) with a commission reflecting a percentage of the amount of credit extended, for which a minimum or maximum compensation amount is set; and (7) by any other mechanism that the Director may find to be a practice for compensating mortgage loan originators, including any mechanism that provides a loan originator with compensation in such a way that the loan originator does not necessarily receive a lower level of compensation for originating a small dollar mortgage than the loan originator would receive for originating a mortgage loan that is not a small dollar mortgage. (c) Contents The report required under subsection (b) shall include— (1) data and other analysis regarding the effect of the approaches to loan originator compensation described in subsection (b) on the availability of small dollar mortgage loans; and (2) analysis and discussion regarding other potential barriers to small dollar mortgage lending. (d) Rulemaking Following the issuance of the report required under subsection (b), the Director may issue regulations to clarify the forms of compensation a lender may use to compensate a loan originator that— (1) are permissible pursuant to section 129B(c) of the Truth in Lending Act (15 U.S.C. 1639b(c)); and (2) would result in the loan originator receiving compensation for originating a small dollar mortgage that is not less than the compensation the loan originator would receive for originating a mortgage loan that is not a small dollar mortgage.