The Consumer Financial Protection Bureau released final mortgage rules Friday that restrict compensation for loanoriginators, prohibiting pay that is based on loan terms. However,the CFPB said in a release the final rule does not include aproposed clause that would have required lenders to offer a nopoints and/or fees mortgage if they were offering a mortgage withpoints.

“Before the financial crisis, many mortgage borrowers weresteered towards risky and high-cost loans because it meant moremoney for the loan originator,” said CFPB Director RichardCordray. “These rules will hold loan originators moreaccountable by banning the incentives that led so many of them todirect consumers toward disaster.”

The new rules prohibit compensation based on loan terms, meaningthat loan originators can't be paid more if the consumer takes aloan with a higher interest rate, prepayment penalty, or higherfees.

Bonuses or higher pay for selling title insurance for a lender'saffiliate is also banned. Originators also are prohibited from“dual compensation” in which they are paid by both the consumer andthe creditor.

The new rule also requires that all loan originators, regardlessof employer, meet the same character and fitness requirements, bescreened for criminal backgrounds and undertake ongoing trainingabout mortgage regulations.

The final rule also prohibits mandatory arbitration of disputesrelated to mortgage loans and the practice of increasing loanamounts to cover credit insurance premiums. While most of the finalrule takes effect in January 2014, these two parts will take effectJune 2013.

One item in the proposed rule that was scrapped for the finalrule was a requirement that originators make available a loanoption with no upfront discount points or origination fees, if theywere making available one with upfront discount points ororigination fees.

Once the rules take effect in January 2014, the CFPB said itwill evaluate how they affect consumers' understanding of upfrontcharges and the decisions consumers make.

To help with compliance, the CFPB said it will, among otherthings, be publishing implementation guides, and, in coordinationwith other agencies, be releasing materials that help creditors andoriginators understand supervisory expectations.