Short answer: on a closed-end home loan, federal rules say a loan officer or mortgage broker may not be paid more because of the loan’s terms, such as a higher interest rate. If you pay the broker directly, the broker may not also be paid by the lender. A loan originator also may not steer you to a loan just because it pays them more, unless the loan is in your interest. Pay you make directly to a broker is listed on the Loan Estimate; pay from the lender to a broker is listed on the Closing Disclosure. This page covers federal law only; other rules may apply where you live. It is general information, not legal or financial advice.
Who these rules cover
The pay and steering rules in 12 CFR 1026.36(d) through (e) apply to closed-end consumer credit secured by a dwelling. They do not apply to a home equity line of credit or to a loan secured by a timeshare interest (12 CFR 1026.36(b), eCFR, text up to date as of October 28, 2026, read October 30, 2026). The CFPB explains that a lender makes loans directly, while a broker does not lend money but helps you find lenders or loans, and that some firms act as both, so you should ask whether a broker is involved (CFPB, last reviewed December 11, 2024, read October 30, 2026; this page may be out of date).
The three main rules
| Rule | What it says | Section |
|---|---|---|
| No pay based on loan terms | No loan originator may receive, and no person may pay, compensation based on a term of the transaction or a proxy for a term. A fixed percentage of the loan amount is allowed, with an optional minimum or maximum dollar amount. | 1026.36(d)(1) |
| No pay from both sides | If a loan originator is paid directly by you, no loan originator may also be paid by anyone else for the same loan. A broker firm you pay may still pay its own employee. | 1026.36(d)(2)(i) |
| No steering for higher pay | A loan originator may not steer you to a loan because it pays them more than other loans they offered or could have offered, unless that loan is in your interest. | 1026.36(e)(1) |
The law behind these rules says a mortgage originator may not receive compensation “that varies based on the terms of the loan (other than the amount of the principal)”, and that this does not allow a yield spread premium or similar pay that would let the total vary with the loan’s terms (15 U.S.C. 1639b(c)(1) and (c)(4)(A), LII). The regulation also lets a lender pay a broker you do not pay directly, even if you pay points or fees (1026.36(d)(2)(ii)).
What a fixed percentage looks like
This example is only for the math, with example figures, not pay for any loan or company.
| Item | Amount |
|---|---|
| Example loan amount | $300,000 |
| Example pay set as a fixed 1.00 percent of the loan amount: $300,000 x 1.00% | $3,000 |
Under the rule, that $3,000 may not go up if the same loan carries a higher interest rate, a prepayment penalty or other different terms. The loan amount itself is not treated as a term, as long as the pay is a fixed percentage of it (1026.36(d)(1)(ii)). The CFPB says lenders may pay loan officers and brokers in ways such as a salary, a fixed amount per loan, a fixed percentage of the loan amount or a mix, with a minimum or maximum per loan (CFPB, last reviewed January 7, 2025, read October 30, 2026; this page may be out of date).
The steering safe harbor
A loan originator meets the anti-steering rule if, for each type of loan you said you were interested in (a fixed APR, an APR that may increase, or a reverse mortgage), they get options from a significant number of the creditors they regularly work with and show you (1026.36(e)(2) and (3)):
- The loan with the lowest interest rate;
- The loan with the lowest interest rate without negative amortization, a prepayment penalty, interest-only payments, a balloon payment in the first 7 years, a demand feature, shared equity or shared appreciation; and
- The loan with the lowest total dollar amount of discount points, origination points or origination fees.
The originator must believe in good faith that you likely qualify for those loans. If they show you more than three loans of a type, they must highlight the ones that meet these tests; fewer than three is allowed if those loans meet all the tests (1026.36(e)(3)(ii), (e)(3)(iii) and (e)(4)).
Where the pay shows on your forms
The official comments say only charges you pay directly to compensate a loan originator go in “Origination Charges” on the Loan Estimate, and pay to a loan originator that is not also the creditor should be listed separately. Pay from the creditor to the originator through the interest rate is not itemized on the Loan Estimate (Supplement I, comments 37(f)(1)-2 and 37(f)(1)-5, eCFR). The Closing Disclosure must list, under “Origination Charges”, the amount the creditor pays a third-party loan originator and the name of the originator receiving it (12 CFR 1026.38(f)(1), eCFR).
For which closing costs may rise after the Loan Estimate, see Loan Estimate closing cost limits. For how points that lower the rate are shown and weighed, see mortgage discount points break-even. To compare the final figures before you sign, see the Closing Disclosure three-day review.
If you think a rule was broken
You can complain about a lender or broker at consumerfinance.gov/complaint. For your own case, ask a lawyer; you can look for legal aid through the Legal Services Corporation.
Questions to ask a broker or loan officer
- Are you a broker or do you work for the lender, and is a broker involved in this loan?
- How are you paid on this loan, by me or by the lender, and how much?
- Is your pay a fixed percentage of the loan amount, and does it change with the rate or other terms?
- For the loan type I want, which option has the lowest rate, which has the lowest rate without risky features, and which has the lowest points and fees?
- Where will your pay show on the Loan Estimate and the Closing Disclosure?
Checklist
- Loan originator pay may not depend on the loan’s terms; a fixed percentage of the loan amount is allowed.
- If you pay the broker directly, the lender may not pay them too.
- Ask for the safe-harbor loan options for each loan type you want.
- Pay you make shows on the Loan Estimate; lender pay to a broker shows on the Closing Disclosure.
- Complain to the CFPB or ask a lawyer if you think a rule was broken.
Start your loan request How our service works
Sources
- eCFR: 12 CFR 1026.36, Prohibited acts or practices and certain requirements for credit secured by a dwelling (Regulation Z), current text up to date as of October 28, 2026
- LII: 15 U.S. Code 1639b, Residential mortgage loan origination
- eCFR: Supplement I to Part 1026, Official Interpretations (Regulation Z), current text up to date as of October 28, 2026
- eCFR: 12 CFR 1026.38, Content of disclosures for certain mortgage transactions (Closing Disclosure) (Regulation Z), current text up to date as of October 28, 2026
- CFPB: How does a mortgage loan officer or broker get paid?
- CFPB: What is the difference between a mortgage lender and a mortgage broker?
- CFPB: Submit a complaint
- Legal Services Corporation: Find legal aid
Disclosure: Modern Lending Solutions is not a lender, loan broker or agent for any lender or loan broker, and does not make credit decisions. Any compensation we receive is paid by participating lenders, only for advertising services. This guide is general information, not financial or legal advice.