The National Association of Mortgage Brokers (NAMB) has discovered a letter written on March 24, 2011 from Rep. Barney Frank, Ranking Member of the House Financial Services Committee to Ben S. Bernanke, Chairman of the Federal Reserve Board (FRB). In the letter, Rep. Frank requests immediate action on two items he took issue with regarding the FRB's change to Regulation Z; Docket No. R-1366, Truth-in-Lending on steering and loan originator compensation.
Rep. Frank's first objection is about the Fed's LO compensation rule appearing to prohibit mortgage brokers, who is receiving borrower-paid compensation from paying their employee loan officers. Rep, Frank's second objection would allow mortgage brokers to make last-minute fee reductions to accommodate for additional settlement costs.
"We thank Congressman Frank very much for writing this letter on behalf of the mortgage broker," said Mike Anderson, CRMS of Essential Mortgage, Government Affairs Committee Chair of NAMB. "We are going to be using this letter from Rep. Frank."
NAMB filed a lawsuit on March 9, 2011 against the Board of Governors of the FRB seeking temporary and preliminary restraints to delay the April 1, 2011 implementation of the LO compensation rule. NAMB’s suit argued that the FRB’s LO compensation rule, as drafted, will "cause devastating and irreparable harm to small business mortgage brokers, their loan officers and their entire staff as of its April 1, 2011 implementation date." Also filing a suit against the FRB regarding the LO compensation rule was the National Association of Independent Housing Professionals (NAIHP).
NAMB and NAIHP requested a temporary restraining order (TRO) against the rule which was denied by Judge Beryl Howell in U.S. District Court for the District of Columbia. However, a stay of the rule was granted on March 31st, however the stay was lifted just six days later on April 6th as the United States Court of Appeals for the District of Columbia and Appellate Judges Karen LeCraft Henderson, David Tatel and Brett M. Kavanaugh lifted the stay and the LO compensation rule took effect the morning of April 7, 2011.
On April 18th, NAIHP withdrew their suit against the FRB with prejudice, which means they can come back at anytime. NAMB continues to work behind the scenes in building a case against the FRB in hopes of receiving an expedited hearing in May before the Appellate Court, however, Appellate Judges LeCraft Henderson, Tatel and Kavanaugh are going on vacation and a hearing would likely not take place until mid- to late-summer.
