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Fed Files Motion to Consolidate NAMB and NAIHP LO Compensation Suits

NationalMortgageProfessional.com
Mar 11, 2011

The Federal Reserve System has requested a consolidation of similar lawsuits filed by both the National Association of Mortgage Brokers (NAMB) and the National Association of Independent Housing Professionals (NAIHP) that seek to delay implementation of the loan originator compensation rule (Regulation Z; Docket No. R-1366, Truth-in-Lending) to be enacted by the Federal Reserve Board’s Final Rule on April 1st. The Board of Governors of the Federal Reserve System, Ben S. Bernanke and Sandra F. Braunstein, listed as defendants in both suits, submitted the Motion to Consolidate Civil Action on March 10 in the U.S. District Court for the District of Columbia and seeks what it calls "judicial economy." "Putting all of various grounds for an ultimate challenge to the Rule in front of one judge should be beneficial," said a statement from NAMB. "However, NAMB must and will remain committed to its effort to obtain an immediate temporary restraining order (TRO) and a subsequent preliminary injunction. This relief is mandated by the specific irreparable harm being caused to mortgage brokers and their loan officers that NAMB alone has identified to the court. Moreover, it will continue to press its application for expedited discovery in support of it particularized challenges to specific sections of the rule." Both the NAMB lawsuit and the NAIHP lawsuit make the case that the Federal Reserve Board's Rule, as presently 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." NAMB's suit is specifically addressing the practice of mortgage brokers compensation loan officers, while NAIHP's suit takes a broader apprach to the LO compensation issue.  "There is no reason why two judges of this Court must consider the same legal and factual arguments regarding the Rule and its alleged effects on mortgage loan originators," said Katherine H. Wheatley, Associate General Counsel for the Board of Governors of the Federal Reserve System. "The plaintiffs in both actions [NAMB and NAIHP] represent the same interests; the Rule challenged in both cases are the same; the administrative records in both cases will be the same; the Board’s defenses to the actions will be the same. Judicial economy would be served by having one judge handle these two cases on a consolidated basis rather than burdening both the court and the defendant with having to deal with two separate cases."
Published
Mar 11, 2011
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