Tag Archives: House Financial Services Committee

House Financial Services Chairman Asks Fed to Delay LO Compensation Rule

16 Mar
Ben Bernanke (lower-right), Chairman of the Fe...

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from an article by John Yedinak Published in NRMLA News March 15th, 2011

 Chairman of the House Financial Services Committee, Spencer Bachus (R-Ala.), sent a letter to the Federal Reserve on Tuesday, urging the agency to delay its loan originator compensation rule, which is scheduled to go into effect April 1, 2011.

“There have been complaints among numerous stakeholders that the final regulation is intentionally vague, that the Board has refused to provide formal guidance, and that different members of the Board staff have offered differing interpretation of its meaning,” said Chairman Bachus. In the letter, which was also signed by 31 other members of the House, the Chairman said that allowing additional time for implementation would help to ensure that the final rule accomplishes the Fed’s goals while eliminating potential misunderstanding or confusion for all interested stakeholders.

“We recommend that the Board delay implementation of the final rule and provide written guidance to facilitate compliance by affected entities,” said Bachus. Mortgage trade groups have requested that the Fed delay the rule, but as of yet, the Fed hasn’t lead anyone to believe it will push back the implementation date.

Both the National Association of Mortgage Brokers and the National Association of Independent Housing Professionals have filed suit against the Fed, saying the rule could cause devastating and irreparable harm to small business mortgage brokers.

The House Financial Services Committee Set to Examine New Compensation Rule

16 Feb
Members of the Committee on Financial Services...

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The  Financial Services Committee will look at implementation of the Federal Reserve’s rule that changes the compensation model for mortgage originators prior to the effective date of April 1.  The committee said it’s concerned the rules may have an adverse impact on the ability of small businesses that originate mortgages to remain in business.

Drafted earlier this year, the Fed’s rule is designed to prevent compensation based on a loans terms or conditions and to prohibit steering a consumer into a higher rate to receive additional compensation.  The Mortgage Bankers Association joined other trade groups in asking the Fed to delay the implementation of the rule. 

“The Rule is far-reaching and requires major changes to long-operating compensation practices that heretofore have been both legal and prevalent,” said the MBA. “Unfortunately, in our view, the Rule does not definitively address many matters of particular importance, and has engendered numerous questions from creditors and loan originators seeking to comply.”

The National Association of Mortgage Brokers praised the committees decision to look into the proposal.  The association argued that mortgage brokers and lenders are ill-equipped with how to fully comply.

adapted from Reverse Mortgage Daily