NAMB applauds Federal Reserve Board's final HOEPA ruleMortgagePress.comNAMB, mortgage broker, HOEPA, Federal Reserve Board, Federal Trade Commission, HUD, GSEs
The National Association of Mortgage Brokers (NAMB) has
applauded the release of the Final Rule Amending Home Mortgage
Provisions of Regulation Z (Truth in Lending). NAMB submitted a
formal comment letter to the Federal Reserve Board (FRB) on April
"The final rule is a clear victory for consumers," said NAMB
President Marc Savitt, CRMS. "It promotes clarity and
professionalism throughout the industry."
NAMB also applauds the rule's requirement of accuracy and
balance in advertisements as well as the establishment of escrow
accounts. The advertising rules will protect consumers from
deceptive or misleading advertising practices. NAMB supports the
requirement that the lender establish an escrow account for the
payment of property taxes and homeowners' insurance for first-lien
loans. The lender may offer the borrower the opportunity to cancel
the escrow after one year.
The final rule withdraws the FRB proposed rules broker-only
disclosure of yield-spread premiums (YSP). The FRB removed the
proposal due to compelling evidence from consumer testing. The
removal reaffirms the findings in two Federal Trade Commission
(FTC) studies in 2004 and 2007. According to the studies,
disclosure of YSP created confusion among borrowers and caused many
consumers to choose more expensive loan products.
"NAMB commends the Federal Reserve Board for taking steps to
allow consumers to shop effectively for the loan that fits their
needs," said Savitt, "It is regulation of the practice and not the
license. That is true consumer protection."
NAMB also calls for the immediate suspension of the Department
of Housing and Urban Developments (HUD) Real Estate Settlement and
Procedures Act (RESPA) reform proposal based on the findings of FRB
tests and FTC consumer tests. These multiple studies indicate that
consumers are more likely to choose higher cost loans because of
the HUD requirement that brokers disclose YSP. This requirement has
cost consumers hundreds of millions of dollars since 1992. It is
time to put an end to this misguided approach. Therefore, NAMB is
calling on HUD to remove the disclosure of YSP so as to not confuse
consumers and promote clarity in the mortgage loan process.
NAMB also calls for the suspension of the agreement between the
New York Attorney General Andrew Cuomo, government-sponsored
enterprises (GSEs) Fannie Mae and Freddie Mac, and the Office of
Federal Housing Enterprise Oversight (OFHEO). Unlike the FRB's
final HOEPA rule, the agreement was not put through a formal notice
and comment period. The FRB's final rule also prohibits creditors
or mortgage brokers from coercing, influencing, or otherwise
encouraging an appraiser to provide a misstated appraisal. NAMB
strongly supports this approach to ensuring honesty and
professionalism in the appraisal process. NAMB believes that the
appraisal agreement reached by New York Attorney General, the GSEs
and OFHEO will hurt small businesses thereby increasing costs to
NAMB continues to review and analyze the final FRB HOEPA rule
and its implications for the mortgage industry.
For more information, visit www.namb.org.