Rep. Barney Frank (D-MA), co-author of the Dodd-Frank Act will disappear from Congress next year. They redistricted Barney out of Congress. The thanks go to Duval Patrick, the Democrat governor of Massachusetts, for giving Barney the boot. The district he represented for 40 years would change a half million constituents in an area where he is unfamiliar, according to Frank. Rep. Frank wrote he “was–and am–concerned about right-wing assaults on the financial reform bill, especially since we are now in a very critical period when the bill is in the process of implementation.”
Now, both of the bill’s namesakes’ will be gone. Barney knows there is a real chance loan originators (LOs) may be able to rid themselves of the insane Loan Officer (LO) Compensation rule if we are smart. The Fed rule was based on the Dodd-Frank approval of what was being written. If Dodd-Frank is repealed, Congress clearly no longer favors its provisions.
It doesn’t really matter if you are a broker, a banker originator or you originate for a bank or credit union, the LO Compensation provisions in Dodd-Frank affect you. And, you haven’t seen anything yet. Right now, the lender can still collect fees and pay the originator. Dodd-Frank takes the LO Compensation rule one step further and prohibits the lender from charging discount points if there is a yield spread premium. Dodd-Frank created the Consumer Protection Finance Bureau (CFPB). You may think that isn’t a big deal but that group is likely to replace state regulators in enforcement. Just in case that still doesn’t register with you, have you ever been subject to an investigation or enforcement action by a federal agency? Even if the charges have no merit, the costs and time lost are huge.
Right now, the CFPB is considering whether it will be a rules-based or enforcement-based agency. You might ask “What is the difference?” We are used to “rules-based.” An agency makes a rule and we must abide by it. An enforcement-based agency takes a concept or principle, such as unfair and deceptive, and takes enforcement action based on what it believes violates that principle. The agency takes targeted enforcement actions that may be relied on to create de-facto rules. The problem is that you never really know whether you are violating the law because you are not following rules. It’s kind of like playing football with a general set of principles and no rules.
Now is the time to get politically active. First, if you are not a member, join NAMB, the Association of Mortgage Professionals. NAMB is the only generally recognized voice of mortgage originators. NAMB represents all originators, not just mortgage brokers. Originators all face similar issues. If we have the members and funds, we can get this law repealed and the Fed Rule changed. Second, give to NAMBPAC so we can get a voice with Congress. Not only do your dollars count but then NAMB knows who to call on to talk to key members about legislation.
THIS IS OUR HOUR ORIGINATORS. This election will determine our future. Don't blow it!
Go to NAMB.org, join NAMB and give generously to NAMBPAC.