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NAMB Call to Action: Are you willing to originate for nothing?

May 12, 2010

Today, the United States Senate will vote on an amendment offered by Sens. Jeff Merkley (D-OR) and Amy Klobuchar (D-MN) to S. 3217, the “Restoring American Financial Stability Act of 2010,” that, if passed, will put the mortgage broker out of business. Participation in this National Association of Mortgage Brokers Call to Action is strongly urged. The bill would prohibit the total amount of direct and indirect compensation paid to mortgage originators from varying based on the terms of a loan, and places a cap on income. This amendment takes consumer choice away by requiring the consumer to pick whether they pay closing costs including a mortgage originator’s fee ALL in cash at the closing table or ALL compensation in the rate of the loan. This amendment is an unwarranted attack on small business mortgage professionals, removes consumer choice and should be defeated. NAMB is meeting with senators and Senate staff to prevent legislative language, like this amendment, from disparately treating different origination channels and picking winners and losers. NAMB requests that you participate in protecting your industry by immediately sending the text of the letter below to your Senator, urging them to oppose this amendment. A vote will take place Wednesday on the Senate floor. ►For a copy of the bill, click here. ►For your senator’s contact information, click here. For more information, visit Dear Senator ______, I write to you today as a small business mortgage professional, and member of the National Association of Mortgage Brokers (NAMB), regarding an amendment (SA. 3962) offered by Senators Merkley (D-OR) and Klobuchar (D-MN) to S. 3217, the “Restoring American Financial Stability Act of 2010.” I have serious concerns with the amendment and fear it will harm small business and consumers nationwide. For the reasons below, I strongly urge you to oppose this, and any other amendment, that would treat origination channels differently, picking winners and losers in the mortgage industry. I believe the amendment will severely limit a consumer’s choice of how best to pay for their home by removing a choice of paying closing costs in the interest rate. It will also restrict me from legitimately and legally compensating my employees. Furthermore, the Federal Reserve Board issued proposed amendments to Regulation Z to prohibit steering late last year which was subject to notice and comments and addresses many of the issues contained in this amendment but in a comprehensive manner. That rule is in the final rulemaking stages. Congress should allow the Federal Reserve Board to continue reviewing comments and developing a final rule that will deter incentivized fees and steering consumers, while preserving mortgage originators’ ability to receive compensation without creating an unlevel playing field between competitors. I have been witness to great hardship as a small business because of the economic decline and its effect on the industry. Small businesses, the cornerstone of American economic prosperity, should not be penalized for helping consumers. The amendment will not only put small business at a disadvantage to larger lenders, but will inevitably force me to close my doors. Less competition in the mortgage industry will drive up costs and remove affordable options for consumers. In particular, low income, minority and rural community borrowers will be hurt the most because this amendment will remove competition from the marketplace. I urge you to oppose Senators Merkley and Klobuchar’s amendment that will limit mortgage originator’s ability to serve consumers by decreasing market competition and increasing costs. Small business mortgage professionals like me will be forced to close their doors should this amendment be included in the financial regulatory reform bill. Thank you for your time and consideration on this issue. Sincerely, [Your Name]              
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May 12, 2010
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