New Loan Officer Compensation Rules
Two industry groups, the National Association of Mortgage Brokers (NAMB) and the National Association of Independent Housing Professionals (NAIHP) filed motions for a temporary restraining order against the Federal Reserve to prevent the rule from taking effect. The court ruled that the industry groups did “not satisfy the stringent standards required for a stay pending appeal.”
Changes to loan officer compensation [which were originally scheduled for April 01, 2011] will take effect this morning.
The new rules stipulate that loan officer compensation can not be based on a mortgage transaction’s terms. Critics say yield spread premiums, which are tied to a mortgage’s interest rate – have served as an incentive for mortgage companies to steer borrowers into high interest loans.
The Federal Reserve Board today opposed a USA appellate court decision to grant a stay on implementation of the Fed’s loan officer compensation rule.
The Fed’s opposition papers, filed today to the Court of Appeals, dispute the chances of a continued delay in implementation of the rule.
“Appellants have little chance of success on the merits, and this factor alone can be sufficient to deny the stay even where irreparable harm is shown…Certainly where any irreparable harm to the appellants is balanced against irreparable harm to the public, consideration of all the factors counsels against a stay pending appeal,” the Fed documents said.