NAMB Files Lawsuit to Stop LO Compensation Rules

NAMB Files Lawsuit to Stop LO Compensation Rules

Courtesy of Tucson Rates and Real Estate

The National Association of Mortgage Brokers filed a lawsuit today against the Board of Governors of the Federal Reserve. the lawsuit is intended to delay the implementation of the new LO Compensation Rules content of Reg. Z. It is surprising that they decided to file this lawsuit just a couple of weeks prior to the rules implementation. Considering the fact that the final rules were passed in August of 2010, this could be a case of "Too little, Too late". Since the Great Mortgage Meltdown began, LO Compensation has already been cut, not due to any government regulations, but by the simple Laws of Economics. It is nice to see an organization such as the NAMB doing something on behalf of their constituency, but the timing seems a little bit odd and really appears to be a last ditch effort. They have issued Calls for Action and released a video, but they are no match for high power Lobbyists and misguided politicians who feel the need to pass regulations so they can boast from their soap boxes that they are doing something about the problems in the Mortgage Industry. I have read hundreds of stories over the last few years about the evil "Liar Loans, and Negative Amortization Loans ", but never once has anyone mentioned they haven't existed in years, just that they have to be stopped. For people outside our industry, this will seem like an atonement for all of the nations problems. The Average Joe thinks a Mortgage Broker is part of the Wall Street Empire who has been stealing their hard earned dollars and receiving Government Bailouts, not the guy sitting next to them at their kids Little League games.

When the smoke clears, the only thing that will really change is the cost of a mortgage to Consumers.It will increase, not a little bit, but by a considerable amount. Since the vast majority of mortgages will be structured under the Lender Paid model, that means that the Loan Officers Fee will be paid as an increase in the interest rate. Doesn't sound all that bad, but the consumer isn't just paying a higher rate on the compensation, but a higher rate on the entire loan amount. Loan Officers will still make the same amount as they do today, nothing has changed except the flexibility to offer Consumers different options to suit their needs. If you are a Loan Officer, don't worry that your pay is being cut, you will just get paid a different way, not a different amount. If the amount of your compensation changes, go to a company who understands the new regulations. As far as the NAMB goes, they are still campaigning for contributions. Whether you think it will make a difference at this point, is up to you.

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