Mortgage Loan Originator Compensation (12 CFR 1026)

Transcription

1 Mortgage Loan Originator Compensation (12 CFR 1026) In January 2013, the Consumer Financial Protection Bureau (CFPB) amended Regulation Z to implement requirements imposed by the Dodd-Frank Act concerning loan originator compensation; qualifications of loan originators; compliance procedures for depository institutions; mandatory arbitration; and the financing of single-premium credit insurance. This particular CompNOTES will focus on loan originator compensation requirements for closed-end consumer credit transactions secured by a dwelling. The effective date is January 1, 2014 (previously January 10, 2014). October 29, 2013 For the latest information please see CUNA s eguide to Federal Laws and Regulations Valerie Moss Regulatory Compliance CREDIT UNION NATIONAL ASSOCIATION

2 1 TABLE OF CONTENTS Background 2 Definition of Loan Originator 2 Definition of Compensation 3 Prohibited Payments to Loan Originators 5 *Payments based on transaction terms and conditions *Payments by persons other than the consumer (dual compensation) Prohibition on Steering 8 Policies and Procedures 9 CFPB Examination Procedures 11

3 2 Background The Reg Z loan originator rule regulates how compensation is paid to loan originators in most closed-end mortgage transactions ( closed-end consumer credit transactions secured by a dwelling ), including: Prohibiting MLOs compensation from being based on the terms of a transaction or a proxy for a transaction term; Permitting certain methods of compensation of MLOs using bonuses, retirement plans, and other compensation plans that are based on mortgage related profits; and Prohibiting MLOs in a transaction from being compensated by both the consumer and another person, such as a creditor. Under the rule, a loan originator generally includes individuals and entities that perform loan origination activities for compensation, such as taking an application, offering credit terms, negotiating credit terms on behalf of a consumer, obtaining an extension of credit for a consumer, or referring a consumer to a loan originator or creditor. A loan originator is either an individual loan originator or a loan originator organization. Individual loan originators are natural persons, such as individuals employed by creditors or mortgage brokerage firms who perform loan origination activities. Loan originator organizations are loan originators that are not natural persons, such as mortgage brokerage firms and sole proprietorships. For purposes of the Reg Z compensation provisions, creditors are defined as loan originators (and loan originator organizations ) only if they are table-funded (i.e., they do not finance transactions at consummation out of their own resources). That means the rule does not restrict payments made to a creditor unless the creditor is table-funded. But the rule restricts payments from all creditors to their loan originator employees or to other loan originators such as mortgage brokers. Definition of Loan Originator Section (a)(1) For purposes of Regulation Z, Section , the term loan originator means a person who, in expectation of direct or indirect compensation or other monetary gain or for direct or indirect compensation or other monetary gain, performs any of the following activities: takes an application, offers, arranges, assists a consumer in obtaining or applying to obtain, negotiates, or otherwise obtains or makes an extension of consumer credit for another person; or through advertising or other means of communication represents to the public that such person can or will perform any of these activities. The term loan originator includes an employee, agent, or contractor of the creditor or loan originator organization if the employee, agent, or contractor meets this definition. The term loan originator includes a creditor that engages in loan origination activities if the creditor does not finance the transaction at consummation out of the creditor s own resources, including by drawing on a bona fide warehouse line of credit or out of deposits held by the creditor.

4 3 The term does not include a person who does not take a consumer credit application or offer or negotiate credit terms available from a creditor, but who performs purely managerial, administrative or clerical tasks on behalf of a person who does engage in such activities. An individual loan originator is a natural person who meets the definition of loan originator in paragraph (a)(1)(i) of this section. A loan originator organization is any loan originator, as defined in paragraph (a)(1)(i) of this section, that is not an individual loan originator. Definition of Compensation Section (a)(3) The term compensation includes salaries, commissions, and any financial or similar incentive. The term compensation includes salaries, commissions, and any financial or similar incentive provided to a loan originator for originating loans. Comment 36(a)-5: Compensation. i. General. For purposes of , compensation is defined in (a)(3) as salaries, commissions, and any financial or similar incentive. For example, the term compensation includes: A. An annual or other periodic bonus; or B. Awards of merchandise, services, trips, or similar prizes. ii. iii. Name of fee. Compensation includes amounts the loan originator retains and is not dependent on the label or name of any fee imposed in connection with the transaction. For example, if a loan originator imposes a processing fee in connection with the transaction and retains such fee, it is compensation for purposes of , including (d) and (e), whether the originator expends the time to process the consumer s application or uses the fee for other expenses, such as overhead. Amounts for third-party charges. Compensation does not include amounts the loan originator receives as payment for bona fide and reasonable charges, such as credit reports, where those amounts are passed on to a third party that is not the creditor, its affiliate, or the affiliate of the loan originator. See comment 36(a)-5.v. iv. Amounts for charges for services that are not loan origination activities. A. Compensation does not include: 1. A payment received by a loan originator organization for bona fide and reasonable charges for services it performs that are not loan origination activities;

5 4 2. A payment received by an affiliate of a loan originator organization for bona fide and reasonable charges for services it performs that are not loan origination activities; or 3. A payment received by a loan originator organization for bona fide and reasonable charges for services that are not loan origination activities where those amounts are not retained by the loan originator but are paid to the creditor, its affiliate, or the affiliate of the loan originator organization. See comment 36(a)-5.v. C. Compensation includes any salaries, commissions, and any financial or similar incentive, regardless of whether it is labeled as payment for services that are not loan origination activities. D. Loan origination activities for purposes of this comment means activities described in (a)(1)(i) (e.g., taking an application, offering, arranging, negotiating, or otherwise obtaining an extension of consumer credit for another person) that would make a person performing those activities for compensation a loan originator as defined in (a)(1)(i). v. Amounts that exceed the actual charge for a service. In some cases, amounts received by the loan originator organization for payment for third-party charges described in comment 36(a)-5.iii or payment for services to the creditor, its affiliates, or the affiliates of the loan originator organization described in comment 36(a)-5.iv.A.3 may exceed the actual charge because, for example, the loan originator organization cannot determine with accuracy what the actual charge will be when it is imposed and instead uses average charge pricing (in accordance with the Real Estate Settlement Procedures Act). In such a case, the difference retained by the loan originator organization is not compensation if the charge imposed on the consumer or collected from a person other than the consumer was bona fide and reasonable and also complies with State and other applicable law. On the other hand, if the loan originator organization marks up the charge (a practice known as upcharging ), and the originator retains the difference between the actual charge and the marked-up charge, the amount retained is compensation for purposes of , including (d) and (e). For example: A. Assume a loan originator organization receives compensation directly from either a consumer or a creditor. Further assume the loan originator organization uses average charge pricing in accordance with the Real Estate Settlement Procedures Act and, based on its past average cost for credit reports, charges the consumer $25 for a credit report provided by a third party. Under the loan originator organization s agreement with the consumer reporting agency, the cost of the credit report is to be paid in a month-end bill and will vary between $15 and $35 depending on how many credit reports the originator obtains that month. Assume the $25 for the credit report is paid by the consumer or is paid by the creditor with proceeds from a rebate. At the end of the month, the cost for the credit report is determined to be $15 for this consumer s transaction, based on the loan originator organization s credit report volume that month. In this case, the $10 difference between the $25 credit report fee imposed on the consumer and the actual $15 cost for the credit report is not compensation for purposes of , even though the $10 is retained by the loan originator organization.

6 5 B. Using the same example as in comment 36(a)-5.v.A, the $10 difference would be compensation for purposes of if the price for a credit report varies between $10 and $15. vi. Returns on equity interests and dividends on equity holdings. The term compensation for purposes of (d) and (e) also includes, for example, awards of stock, stock options and equity interests. Thus, the awarding of stock, stock options, or equity interests to loan originators is subject to the restrictions in (d) and (e). For example, a person may not award additional stock or a preferable type of equity interest to a loan originator based on the terms of a consumer credit transaction subject to originated by that loan originator. However, bona fide returns or dividends paid on stock or other equity holdings, including those paid to owners or shareholders of a loan originator organization who own such stock or equity interests, are not compensation for purposes of (d) and (e). Bona fide returns or dividends are those returns and dividends that are paid pursuant to documented ownership or equity interests and that are not functionally equivalent to compensation. Ownership and equity interests must be bona fide. Bona fide ownership and equity interests are allocated according to a loan originator s respective capital contribution where the allocation is not a mere subterfuge for the payment of compensation based on terms of a transaction. Ownership and equity interests also are not bona fide if the formation or maintenance of the business from which returns or dividends are paid is a mere subterfuge for the payment of compensation based on the terms of a transaction. For example, assume that three individual loan originators form a loan originator organization that is a limited liability company (LLC). The three individual loan originators are members of the LLC, and the LLC agreement governing the loan originator organization s structure calls for regular distributions based on the members respective equity interests. If the members respective equity interests are allocated based on the members terms of transactions, rather than according to their respective capital contributions, then distributions based on such equity interests are not bona fide and, thus, are compensation for purposes of (d) and (e). Prohibited Payments to Loan Originators Section (d) Under the rule, a loan originator generally cannot receive commissions or other compensation 1) based on the terms of the mortgage loan; or 2) compensation simultaneously from both a consumer and another party such as a mortgage broker or other creditor. Payments based on transaction terms and conditions (d)(1): A loan originator cannot receive (directly or indirectly) compensation in an amount that is based on any of the transaction s terms or conditions. The term of a transaction is any right or obligation of the parties to a credit transaction. For example, the rule prohibits compensation to a loan originator based on the mortgage loan transaction s interest rate, annual percentage rate, loan-to-value ratio, or the existence if a pre-payment penalty. The amount of credit extended is not deemed to be a transaction term or condition, provided compensation received by or paid to a loan originator is based on a fixed percentage of the amount of credit extended; however, such compensation may be subject to a minimum or maximum dollar amount.

7 6 Examples of prohibited compensation include, but are not limited to: A loan originator receiving higher compensation based on the transaction s interest rate, such as receiving 2 percent of the loan amount if the interest rate is above 6 percent and 1 percent of the loan amount if the interest rate is 6 percent or less. A loan originator receiving higher compensation based on whether the loan contract contains a prepayment penalty. A loan originator receiving higher compensation for closing more than 10 transactions per month with an interest rate higher than 6 percent. An individual loan originator receiving additional compensation if the consumer buys creditor required title insurance from the originator s employer or its affiliate, rather than a third party. CFPB Small Entity Compliance Guide 2013 Loan Originator Rule Proxy for transaction term. In order to prevent evasion, the rule also prohibits compensation based on a proxy for a term of a transaction. A factor (that is not itself a term of a transaction originated by the loan originator) is a proxy for the transaction s terms if: (1) the factor substantially correlates with a term or terms of the transaction; and (2) the loan originator can, directly or indirectly, add, drop, or change the factor when originating the transaction. For example: Portfolio loans versus loans sold into the secondary market: Compensation based on whether a loan is held in portfolio or sold into the secondary market could be compensation based on a proxy for a transaction term if: (1) the terms of the loans held in portfolio consistently differ from those in the sold loans (for example, five-year terms for portfolio loans versus 30-year terms for sold loans) and (2) the loan originator has the ability to encourage a consumer to take one set of terms over another. (Comment 36(d)(1)-2.ii.A) State where property securing the loan is located: Compensation based on whether a property securing the loan is located in State A versus State B likely would not be a proxy for loan terms even if the loans secured by property in State A have terms that consistently differ from the terms of loans secured by property in State B. (For example, they have a higher interest rate.) This is because a loan originator typically cannot influence whether the transaction is secured by property located in State A or State B, such as encouraging a consumer to purchase a home in one state versus another. (Comment 36(d)(1)- 2.ii.B) Low-to-moderate-income consumer: Compensation based on whether a consumer is of low-to-moderate income likely would not be a proxy for loan terms even if the loans to such consumers have terms that consistently differ from the loans of other consumers (for example, they have a higher interest rate). This is because loan originators typically cannot change whether a consumer is of low-to moderate-income. CFPB Small Entity Compliance Guide: 2013 Loan Originator Rule

8 7 Permissible compensation methods The rule expressly recognizes seven permissible compensation methods with respect to the payment of salary, commissions, and other compensation. These compensation methods are effectively safe harbors. Compensation paid or received according to these methods is not based on transaction terms or proxies for transaction terms: The loan originator s overall dollar volume (total dollar amount of credit extended or total number of transactions originated), delivered to the creditor. The long-term performance of the originator s loans. An hourly pay rate based on the actual number of hours worked. Loans made to new applicants/borrowers versus loans to existing borrowers. A payment that is fixed in advance for every loan the originator arranges for the creditor (for example, $600 for every credit transaction arranged for the creditor, or $1,000 for the first 1,000 credit transactions arranged and $500 for each additional credit transaction arranged). The percentage of the loan originator s applications that close. The quality of the loan originator s loan files (for example, accuracy and completeness of the loan documentation) submitted to the creditor. This is not an exhaustive list; institutions may use other compensation structures as long as they comply with the rule. CFPB Small Entity Compliance Guide: 2013 Loan Originator Rule Certain employer payments excluded from the prohibition: The regulation permits employers to make contributions from general profits derived from mortgage activity to individual loan originators 401(k) plans, employee stock plans, and other qualified plans under tax and employment law. However, contributions cannot be directly or indirectly based on the terms of an individual loan originator s mortgage transactions. In addition, employers may pay bonuses or make contributions to non-qualified profit-sharing plan or retirement plans from general profits derived from mortgage activity if either: Compensation paid to an individual MLO does not, in the aggregate, exceed 10% of the individual loan originator s total compensation corresponding to the time period for which the compensation under the non-deferred profits-based compensation plan is paid; or The individual MLO was a loan originator for ten or fewer transactions consummated during the 12- month period preceding the date of the compensation determination. Payments by persons other than the consumer (d)(2): The rule generally prohibits a loan originator from receiving compensation (directly or indirectly) from a consumer and another person, such as a creditor, in the same transaction (i.e., dual compensation). Compensation directly from a consumer includes payments to a loan originator made pursuant to an agreement between the consumer and a person other than the creditor or its affiliates. There is an exception to the rule for compensation that the credit union pays to its individual loan originators.

9 8 Comment 36(d)(2)(i)-2: Compensation received directly from a consumer. i. Payments by a consumer to a loan originator from loan proceeds are considered compensation received directly from the consumer, while payments derived from an increased interest rate are not considered compensation received directly from the consumer. However, payments by a consumer to the creditor are not considered payments to the loan originator that are received directly from the consumer whether they are paid directly by the consumer (for example, in cash or by check) or out of the loan proceeds. See the definition of compensation in (a)(3) and related commentary. ii. Funds from the creditor that will be applied to reduce the consumer s settlement charges, including origination fees paid by a creditor to the loan originator, that are characterized on the disclosures made pursuant to the Real Estate Settlement Procedures Act as a credit are nevertheless not considered to be received by the loan originator directly from the consumer for purposes of (d)(2)(i). Compensation directly from a consumer includes payments to a loan originator made pursuant to an agreement between the consumer and a person other than the creditor or its affiliates: Comment 36(d)(2)(i)-2(iii): Compensation to a loan originator is sometimes paid on the consumer s behalf by a person other than a creditor or its affiliates, such as a non-creditor seller, home builder, home improvement contractor or real estate broker or agent. Such payments to a loan originator are considered compensation received directly from the consumer for purposes of (d)(2) if they are made pursuant to an agreement between the consumer and the person other than the creditor or its affiliates. State law determines whether there is an agreement between the parties. And as mentioned above, there is an exception to the rule for compensation that the credit union pays to its individual loan originators: Comment 36(d)(2(1)-1: Section (d)(2)(i)(C) provides that, if a loan originator organization receives compensation directly from a consumer, the loan originator organization may provide compensation to individual loan originators, and the individual loan originator may receive compensation from the loan originator organization, subject to the restriction in (d)(1). Prohibition on Steering - Section (e)(3)(i)(C) Under Regulation Z, a loan originator may not direct a consumer into a particular transaction secured by a dwelling in order for the MLO to receive greater compensation from the creditor than in other transactions the originator offered or could have offered, unless the transaction is in the consumer s interest. The rule also includes permissible transactions that do not violate this prohibition on steering. The rule provides a safe harbor for a loan with the lowest total dollar amount of discount points, origination points or origination fees (or, if two or more loans have the same total dollar amount of discount points, origination points or origination fees, the loan with the lowest interest rate that has the lowest total dollar amount of discount points, origination points or origination fees).

10 9 Comment 36(e): Loan Options Presented 3. Lowest interest rate. To qualify under the safe harbor in (e)(2), for each type of transaction in which the consumer has expressed an interest, the loan originator must present the consumer with loan options that meet the criteria in (e)(3)(i) for which the loan originator has a good faith belief that the consumer is likely to qualify. The criteria are: the loan with the lowest interest rate; the loan with the lowest total dollar amount of discount points, origination points or origination fees; and a loan with the lowest interest rate without negative amortization, a prepayment penalty, a balloon payment in the first seven years of the loan term, shared equity, or shared appreciation, or, in the case of a reverse mortgage, a loan without a prepayment penalty, shared equity, or shared appreciation. The loan with the lowest interest rate for which the consumer likely qualifies is the loan with the lowest rate the consumer can likely obtain, regardless of how many discount points, origination points or origination fees the consumer must pay to obtain it. To identify the loan with the lowest interest rate, for any loan that has an initial rate that is fixed for at least five years, the loan originator uses the initial rate that would be in effect at consummation. For a loan with an initial rate that is not fixed for at least five years: i. If the interest rate varies based on changes to an index, the originator uses the fully indexed rate that would be in effect at consummation without regard to any initial discount or premium. ii. For a step-rate loan, the originator uses the highest rate that would apply during the first five years. Policies and Procedures - Section (j) Depository institutions must establish and maintain written policies and procedures reasonably designed to ensure and monitor compliance with these provisions, as well as the compliance of its employees and any subsidiaries and their employees. The written policies and procedures must be appropriate to the nature, size, complexity, and scope of the mortgage-lending activities of the institution and its subsidiaries. Record Retention (c)(2) Credit unions must keep records related to the requirements for loan originator compensation for three years after the date of payment or receipt of compensation. For transactions subject to the loan originator rule:

11 10 A creditor shall maintain records sufficient to evidence all compensation it pays to a loan originator, and the compensation agreement that governs those payments for three years after the date of payment. A loan originator organization shall maintain records sufficient to evidence all compensation it receives from a creditor, a consumer, or another person; all compensation it pays to any individual loan originator, and the compensation agreement that governs each such receipt or payment, for three years after the date of each such receipt or payment. Comment (c)(2): Records related to requirements for loan originator compensation i. Records sufficient to evidence payment and receipt of compensation. Records are sufficient to evidence payment and receipt of compensation if they demonstrate the following facts: the nature and amount of the compensation; that the compensation was paid, and by whom; that the compensation was received, and by whom; and when the payment and receipt of compensation occurred. The compensation agreements themselves are to be retained in all circumstances consistent with (c)(2)(i). The additional records that are sufficient necessarily will vary on a case-by-case basis depending on the facts and circumstances, particularly with regard to the nature of the compensation ii. iii. Compensation agreement. For purposes of (c)(2), a compensation agreement includes any agreement, whether oral, written, or based on a course of conduct that establishes a compensation arrangement between the parties (e.g., a brokerage agreement between a creditor and a mortgage broker or provisions of employment contracts between a creditor and an individual loan originator employee addressing payment of compensation). Where a compensation agreement is oral or based on a course of conduct and cannot itself be maintained, the records to be maintained are those, if any, evidencing the existence or terms of the oral or course of conduct compensation agreement. Creditors and loan originators are free to specify what transactions are governed by a particular compensation agreement as they see fit. Three-year retention period. The requirements in (c)(2)(i) and (ii) that the records be retained for three years after the date of receipt or payment, as applicable, means that the records are retained for three years after each receipt or payment, as applicable, even if multiple compensation payments relate to a single transaction. For example, if a loan originator organization pays an individual loan originator a commission consisting of two separate payments of $1,000 each on June 5 and July 7, 2014, then the loan originator organization is required to retain records sufficient to evidence the two payments through June 4, 2017, and July 6, 2017, respectively.

12 11 CFPB Examination Procedures (August 2013) Prohibited Payments to Loan Originators a. Determine that, in connection with a closed-end consumer credit transaction secured by a dwelling, no loan originator receives and no person pays to a loan originator, directly or indirectly, compensation that is based on: NOTE: The term loan originator means, a person who, in expectation of direct or indirect compensation or other monetary gain or for direct or indirect compensation or other monetary gain: takes an application, offers, arranges, assists a consumer in obtaining or applying to obtain, negotiates, or otherwise obtains or makes an extension of consumer credit for another person; or through advertising or other means of communication represents to the public that such person can or will perform any of these activities. The term loan originator includes an employee, agent, or contractor of the creditor or loan originator organization if the employee, agent, or contractor meets this definition. The term loan originator also includes a creditor that engages in loan origination activities if the creditor does not finance the transaction at consummation out of the creditor s own resources, including by drawing on a bona fide warehouse line of credit or out of deposits held by the creditor. 1. A term of a transaction, the terms of multiple transactions by an individual loan originator, or the terms of multiple transactions by multiple individual loan originators, or NOTE: For purposes of section (d)(1) only, a term of a transaction is any right or obligation of the parties to a credit transaction. The amount of credit extended is not a term of a transaction or a proxy for a term of a transaction, provided that compensation received by or paid to a loan originator, directly or indirectly, is based on a fixed percentage of the amount of credit extended; however, such compensation may be subject to a minimum or maximum dollar amount. ( (d)(1)(ii)) 2. A proxy for a term of a transaction. ( (d)(1)(i)) b. Determine that a loan originator that receives a contribution to a defined contribution, tax-advantaged plan that meets the applicable requirements of the Internal Revenue Code does not receive a contribution that is directly or indirectly based on the terms of the individual loan originator s transactions. ( (d)(1)(iii)) c. Determine whether an individual loan originator receives compensation pursuant to a non-deferred, profitsbased compensation plan only if: 1. The compensation paid to an individual loan originator is not directly or indirectly based on the terms of that individual loan originator s transactions that are subject to section (d); and 2. At least one of the following conditions is satisfied: i. The compensation paid to an individual loan originator does not, in the aggregate, exceed 10 percent of the individual loan originator s total compensation corresponding to the time period for which the compensation under the non-deferred profits-based compensation plan is paid; or

13 12 ii. The individual loan originator was a loan originator for ten or fewer transactions consummated during the 12-month period preceding the date of the compensation determination. Prohibition on Dual Compensation a. If any loan originator receives compensation directly from a consumer in a closed-end consumer credit transaction secured by a dwelling, determine that ( (d)(2)): 1. No loan originator receives compensation, directly or indirectly, from any person other than the consumer in connection with the transaction ( (d)(2)(i)(A)(1)) except that a loan originator organization may receive compensation from a consumer and pay compensation to its individual loan originator ; and 2. No person who knows or has reason to know of the consumer-paid compensation to the loan originator (other than the consumer) pays any compensation to a loan originator, directly or indirectly, in connection with the transaction. ( (d)(2)(i)(A)(2)) NOTE: Loan originator organizations are permitted to compensate their employees if the organization receives compensation directly from a consumer, subject to the prohibition on payments to loan originators in section (d)(1). Prohibition on Steering a. Determine that, in connection with a consumer credit transaction secured by a dwelling, a loan originator does not direct or steer a consumer to consummate a transaction based on the fact that the originator will receive greater compensation from the creditor in that transaction than in other transactions the originator offered or could have offered to the consumer, unless the consummated transaction is in the consumer s interest. ( (e)(1)) NOTE: The rule provides a safe harbor to facilitate compliance with the prohibition on steering in section (e)(1). The loan originator is deemed to comply with the anti-steering prohibition if the consumer is presented with loan options that meet all of the following conditions for each type of transaction in which the consumer expressed an interest: 1. The loan originator obtains loan options from a significant number of the creditors with which the originator regularly does business and, for each type of transaction in which the consumer expressed an interest, presents the consumer with loan options that include ( (e)(3)(i)): i. The loan with the lowest interest rate; ( (e)(3)(i)(A)) ii. The loan with the lowest interest rate without negative amortization, a prepayment penalty, interest-only payments, a balloon payment in the first seven years of the life of the loan, a demand feature, shared equity, or shared appreciation; or, in the case of a reverse mortgage, a loan without a prepayment penalty, or shared equity or shared appreciation; and ( (e)(3)(i)(B))

14 13 iii. The loan with the lowest total dollar amount of discount points, origination points or origination fees (or, if two or more loans have the same total dollar amount of discount points, origination points or origination fees, the loan with the lowest interest rate that has the lowest total dollar amount of discount points, origination points or origination fees). iv. ( (e)(3)(i)(C)) 2. The loan originator has a good faith belief that the options (presented to the consumer that are set forth, above) are loans for which the consumer likely qualifies. ( (e)(3)(ii)) 3. For each type of transaction, if the originator presents to the consumer more than three loans, the originator highlights the loans that satisfy options 1.i, 1.ii, and 1.iii above. ( (e)(3)(iii)) NOTE: If the requirements set forth in section (e) are met, the loan originator can, without steering, present fewer than three loans. ( (e)(4))