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May 01, 2026
Cadwalader partners Mercedes Tunstall and Andrea Nixon were featured in Inside Mortgage Finance’s coverage of NEXA Lending’s proposed mortgage servicing rights (MSR)-linked compensation structure for loan originators.
Andrea explained that the model would give LOs credit not only for originating loans but also for the additional value embedded in MSRs. She noted that “LOs could be incentivized to ensure their borrowers are getting higher interest rate mortgages because the value of MSR may in turn increase,” and while the initiative appears intended for good, it may also create potential conflicts of interest.
Mercedes outlined the regulatory considerations, noting that the structure could implicate CFPB rules, including loan originator compensation requirements, as well as RESPA and TILA. She described the approach as “an interesting kind of middle ground because it’s not looking at loan by loan, which is where all the restrictions are in place. It’s looking at a set of loans that meet certain parameters, which incentivizes that [LO] to originate loans that fit within those parameters, whether or not that’s best for the consumer.”
She added that the model could be adopted swiftly across the industry and flagged potential challenges if oversight shifts to another regulator without clear guidance channels.
Read the full article in Inside Mortgage Finance (subscription required).
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