Wednesday, March 16, 2011

More anxiety over loan originator limits

So tell me why it isn't unseemly that lenders are so publicly anxious to stop the new loan originator compensation rule (q.v. below) from taking effect in April?

If it's a position that makes lenders and their allies proud, then why, for example, did Rep. Spencer Bachus, R-Ala., not post his letter requesting a delay in enforcement on either his own House Web site or the House Financial Services Committee site? (Or, if it is there, could someone please point it out?)

Anyway, here's more from Reverse Mortgage Daily about efforts to push back the enforcement date -- a letter from (predictably) the National Reverse Mortgage Lenders' Association, and, earlier, various efforts by the National Association of Mortgage Brokers including a lawsuit.

(The NAMB site, btw, offers you a copy of its complaint in the lawsuit if you provide your email address here. They send you a link to click, and when you click it, they do give you the complaint, but they also invite you to register with the organization and send them money. Kind of a hard sell. Should you happen to want to follow the case on PACER, the case is National Association of Mortgage Brokers v. Board of Governors of the Federal Reserve System, in the U.S. District Court for the District of Columbia, case no. 1:11-cv-00506-RLW.)

[UPDATE: So, OK, I've been reading the NAMB complaint. They claim the new regulation unfairly imposes strict rules on how mortgage brokers' loan officers get paid, without similarly restricting banks or other lending institutions, and so the loan officers who work for mortgage brokerage companies are quitting or having to quit and moving over to differently regulated competitors. Which, if accurate, means that, yes, there's a fairness issue here. But that suggests a need for more consistent strictness, not overall leniency, no?]

NAMB also posts a letter by Senators Tester (R-La.) and Vitter (D-Mont.) (yes, a Democrat, too bad) objecting, among other things, that
"...we remain concerned the Federal Reserve has not fully evaluated the impact of this rule on the housing market once the 'defense to foreclosure' provisions contained in Section 1413 of the Dodd-Frank Act come into effect on July 21, 2011. Under this section, a violation of the rules related to loan originator compensator will allow a borrower to assert that violation as a defense to foreclosure for the life of the loan..."
I.e. wouldn't it be dreadful if some lenders had to forgive debts as a penalty for sharp practices?

Wouldn't it be something else if the voters and the major media started reading the financial trade press where letters like these are available for public view?

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