For how long must loan originator compensation records be retained?

The correct answer is that loan originator compensation records must be retained for three years. This duration is established under regulations set by the Consumer Financial Protection Bureau (CFPB) and is intended to ensure transparency and accountability in the mortgage lending process.

Retaining these records for three years allows for sufficient time to review and audit compensation practices, thus protecting both consumers and lenders from potential violations of the applicable laws. This timeframe is consistent with regulatory requirements that aim to promote fair lending practices and maintain accurate records that can support compliance assessments during examinations or audits.

In the context of compliance and regulatory oversight, keeping these records for three years facilitates appropriate enforcement actions, should issues arise related to loan originator compensation, ensuring that all parties involved are held to a standard of accountability.