The National Association of Mortgage Brokers recently sent a letter to the Federal Reserve asking for a 12-month delay in enforcing changes to Regulation Z and for further clarification to loan originator compensation.

These changes, to protect borrowers, must be complied with by April 2011.

From the letter…

The National Association of Mortgage Brokers (“NAMB”) is extremely concerned about the
potential unintended consequences that are likely to follow the April 1, 2011 compliance
deadline for the Board’s final rule on loan originator compensation (“Rule”).

The Rule, by design, is a game-changer for the mortgage industry.  It forces the industry to re-
examine well-established and, until recently, legal policies and procedures, and requires
significant changes to the way in which loans are priced and the way that loan originators may be
compensated for their services.

While we acknowledge the Board’s efforts in promulgating the Rule and the Board’s intent to
change the way business is done in our industry, we are deeply concerned that the Rule is flawed
in certain respects and has yielded more questions than answers from both creditors and loan
originators seeking to comply with the Rule.

NAMB is concerned that the Board has no legal basis for treating mortgage broker companies
differently than other firms carrying out the same or substantially similar business operations.
Under the Rule, certain activities are prohibited as “unfair or deceptive trade practices” for one
class of mortgage market participant, while another similarly situated class of participants is
permitted to engage in the very same activities.

Over the past several years, our industry has been overwhelmed with legislative and regulatory
changes at both the state and federal levels.  Such changes have been economically burdensome
for the industry to plan for and keep up with, and the constant changes are having a profoundly
negative impact on the market.

You can check out the letter in its entirety below…



h/t leapfrog

NAMB, National Association of Mortgage Brokers Letter to the Fed on Reg Z