Late Tuesday, the United States Court of Appeals for the District of Columbia ruled against the stay requested by the National Association of Mortgage Brokers (NAMB) and the National Association of Independent Housing Professionals (NAIHP) regarding the Federal Reserve Board's (FRB) Regulation Z; Docket No. R-1366, Truth-in-Lending on steering and loan originator compensation. NAMB and NAIHP submitted their response to the Court of Appeals on April 5th as requested by the Court, but Appellate Judges Karen LeCraft Henderson, David Tatel and Brett M. Kavanaugh, after review of the response by both the FRB and NAMB/NAIHP, lifted the stay and the LO compensation rule is now in effect. NAMB will meet with its team of attorneys Tuesday night to discuss the next steps in the process, including another possible appeal to the enforcement of the Rule.
“NAMB is obviously very disappointed with this decision, but will continue to represent the mortgage broker, the loan originator, and the industry,” said NAMB President Mike D’Alonzo. “I want to commend the efforts of NAMB and NAIHP and their respective legal teams throughout this entire process.”
The Appellate Court further ordered that the motions be denied, because NAMB and NAIHP, according to the official ruling, "have not satisfied the stringent standards required for a stay pending appeal."
“It is disappointing that the merits of the case are not being recognized,” said Lisa Schreiber, executive vice president of wholesale lending for TMS Funding. “The impact to the consumer is much greater than the originator in this new regulation. Hopefully there will be an opportunity for an appeal.”
With the stay dissolved, industrywide adoption of LO compensation plans will be in effect beginning tomorrow morning. Most in the industry were already prepared to begin conducting business under their new LO compensation plans as of last Friday, April 1st, the initial effective date of the FRB’s Rule.
“Our company’s systems are being programmed this evening and will be live with the compensation plans that were scheduled to go in effect on April 1st,” said Shane O'Dell, director of wholesale production for Bay Equity. “We support NAMB's efforts and look forward to the next phase in fighting to preserve mortgage options for borrowers.”
Joe Amoroso, national director of sales for Real Estate Mortgage Network (REMN) said," As a wholesaler, we were ready on April 1st and will be ready tomorrow for these industry changes. It does present its challenges to turn it off and turn it back on, but we have adjusted accordingly. We support NAMB and their efforts to continue to bring this issue to the forefront. We hope their efforts will be something that is favorable for consumers and the industry."
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- Wholesale Credit Risk Specialist - Federal Reserve Bank of San Francisco - San Francisco, CA