The New York Times rambles, and mangles mortgages along the way

The New York Times rambles, and mangles mortgages along the way

Mortgage finance and mortgage regulation aren’t the paper’s strong suits

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National Association of Mortgage Brokers asks Fed for Reg Z delay

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The National Association of Mortgage Brokers sent a letter to the Federal Reserve asking for a 12-month delay in enforcing changes to Regulation Z and for further clarification to loan originator compensation. Regulation Z, which was amended by the Dodd-Frank Act, is the authority given to the Fed to implement the Truth in Lending Act. The regulation requires lenders to disclose terms and cost of credit to consumers, and gives borrowers the right to cancel certain credit transactions that involve a lien on a principal dwelling. A slew of other rules under the law would impose limits on home-equity plans and mortgages that are subject to special requirements, requires appraisal management companies to disclose costs and others. The Fed published its final rule on loan originator compensation in September, which prohibits basing compensation to a loan originator on a loan’s terms or conditions, subject to a limited exception for loan amount. It also prohibits compensation to a loan originator from both the consumer and a party other than the consumer for the same transaction, and blocks originators from steering a consumer to receive greater compensation. Lenders are required to comply by April 11. But the NAMB, and the Mortgage Bankers Association before them, asked the Fed for more clarification before companies are required to go through the extra cost of compliance. "NAMB’s representatives stated that the primary request was to have the rule delayed due to (the) fact that there was no compliance guide written by the Federal Reserve Board for the changes to Regulation Z," the trade group said in a statement released Thursday. According to the group, the Small Business Regulatory Enforcement Fairness Act requires a compliance guide. They added that without one the industry is working in the dark. "It is NAMB’s argument that mortgage brokers and lenders are ill-equipped with how to fully comply with the rule, and therefore, have no idea how to project for income," NAMB said. "Without guidance from the Federal Reserve, investors also have not been able to put together pricing models and have yet to conduct consumer testing. The Federal Reserve has also not been able to forecast the impact that the enforcement of loan originator compensation would have on small business." Write to Jon Prior. Follow him on Twitter: @JonAPrior

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