NAMB to CFPB: Broker Model Yields a Tangible Benefit to the Consumer

NAMB—The Association of Mortgage Professionals recently met with the Consumer Financial Protection Bureau (CFPB) to discuss the role of the mortgage broker in today's mortgage finance and the housing market. After the meeting, NAMB polled four broker entities from various areas of the U.S. to detail the mandatory credits a broker is required to provide consumers when rate sheet pricing exceeds the broker’s contractually obligated Lender Paid Compensation agreement. "Numerous conversations with our membership indicate they provide a consumer credit nearly 98 percent of the time," said NAMB President Don Frommeyer, CRMS in the letter to the CFPB. NAMB contends that the mortgage broker community provides mortgage credits back to the consumer that range in the billions annually, thus stimulating the nation's economy. "Based on these numbers and extrapolating on the entire mortgage broker community, which is estimated at nearly 5,000 individual entities, we can clearly deduce that mortgage brokers are providing credits in the billions of dollars each year," said Frommeyer. "That is money going back to the consumer to assist them in operating and sustaining their new household." The letter continued and stressed that the CFPB's proposed Qualified Mortgage (QM) and Ability-to-Repay (ATR) rules, as curently written, will force a good portion of the nation's mortgage population out of business. NAMB presented two options for the CFPB to consider: ►The elimination of "Creditor to Broker Compensation" from the Qualified Mortgage/Ability-to-Repay's three percent points and fees cap in order to level the playing field for all financing conduits and provide transparent real estate transactions for all.   ►Increase the QM/ATR's Three Percent Points and Fees Cap to five percent in order to assist the brokers. However, as noted, it will still create a disparity with the broker community due to the APR calculation's which will include creditor to broker compensation. NAMB continues its mission in playing a vital role in the recovery of the U.S. housing market and the recovery of the American economy nationwide.  "A total elimination of creditor to broker compensation or an increase to five percent in the 'Points  and Fees Cap' provision will ensure that all mortgage brokers, especially those serving low-moderate income homeowners, as well those operating in geographic locations with low to  moderate loan amounts, will have the opportunity to assist in the ongoing housing recovery," said Frommeyer. The CFPB's Ability-to-Repay and Qualified Mortgage Rule is set to take effect on Jan. 10, 2014.