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Fed Files Opposition in Appellate Court to Stay of LO Compensation Rule

NationalMortgageProfessional.com
Apr 04, 2011

The Federal Reserve Board (FRB) has filed opposition in the United States Court of Appeals for the District of Columbia on Monday against the stay granted against the the final rule on loan officer compensation, officially known as Regulation Z; Docket No. R-1366, Truth-in-Lending. The National Association of Mortgage Brokers (NAMB) and the National Association of Independent Housing Professionals (NAIHP) were granted a stay implementation late last Thursday against the LO compensation rule on the eve of the April 1st date the rule was set be enforced. NAMB and NAIHP have until 10:00 a.m. EST on Tuesday, April 5 to counter the Fed's opposition.  "NAMB and it's legal team are currently analyzing the FRB's opposition," said Mike D'Alonzo, president of NAMB. "We are currently preparing our response for tomorrow's deadline." The stay was granted by Appellate Judges Karen LeCraft Henderson, David Tatel and Brett M. Kavanaugh, just a few days after Judge Beryl Howell of U.S. District Court for the District of Columbia denied NAMB and NAIHP's request for a temporary restraining order (TRO) against the LO compensation rule prior to its April 1st enforcement. On March 10, the FRB had requested a consolidation of similar lawsuits filed by both NAMB and the NAIHP that sought to delay implementation of the LO compensation rule. The Board of Governors of the Federal Reserve System, Ben S. Bernanke and Sandra F. Braunstein, listed as defendants in both suits, submitted a Motion to Consolidate Civil Action in the U.S. District Court for the District of Columbia, seeking what it called "judicial economy." NAMB’s attack on the rule focuses on the portion that restricts mortgage brokers that accept compensation from the consumer directly from paying their loan originator employees a portion of that compensation in the form of a commission. According to the appeal filed today by the FRB, "NAMB does not challenge the prohibition on dual compensation, whereby a loan originator would be paid both by the consumer and by the creditor." NAIHP, on the other hand, challenges the LO compensation rule in its entirety, arguing that the FRB relied almost entirely on the FRB's Consumer Testing of Mortgage Broker Disclosures study, conducted by MACRO International Inc. in 2008, in developing its rule.
Published
Apr 04, 2011
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