In their Oversight Plan for the One Hundred Twelfth Congress, the Financial Services Committee includes plans to review the loan originator compensation rules due to take effect on April 1, 2011. With the opening of each new Congressional session, each committee is required to file their Oversight Plan, which lays out their legislative agenda for the new session.
Following calls by the Mortgage Bankers Association, National Association of Mortgage Brokers and the Small Business Administration to the Federal Reserve asking for additional guidance and potential delay of implementation of the compensation rules, the Oversight Plan calls on the committee to review the impact of the rules especially on small business.
"The Committee will examine the implementation of proposed rules issued by the Federal Reserve governing mortgage origination compensation, which are scheduled to become effective April 1, 2011. The Committee is concerned that the rules may have an adverse impact on the ability of small businesses that originate mortgages to remain in business. The Committee will also review the interaction of existing real estate settlement rules with rules mandated by the Dodd-Frank Act."
It remains to be seen when the Committee will calendar their review and whether they will ask the Federal Reserve to delay implementation pending the results of their review.
The Oversight Plan lays out a wide reaching agenda that includes monitoring implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Capital Markets, GSE reform, HUD, and the operations of the new Consumer Financial Protection Bureau.
Included in the Capital Markets category is a review of the creation of a covered bonds market for mortgage financing. The goal is foster increased liquidity through improved underwriting standards.
The Plan does not provide specifics in how the Committee will approach GSE reform but notes that they must examine proposals regarding Fannie Mae and Freddie Mac to determine whether they should be modified or terminated all together. It also calls for a comprehensive review of Ginnie Mae's solvency and capacity to handle its growing market share.
The Committee also plans a review of the budget and programs of the Department of Housing and Urban Development. The goal is to examine the effectiveness of programs and seek cuts especially by eliminating inefficient and duplicative programs. This includes programs offered by the FHA and funding for housing counseling programs.
It is a far reaching agenda that will most likely have an impact on the regulatory path that the mortgage industry has been on of late. At the very least, it appears that change will continue to be the norm as the government continues to examine ways to modify the origination process and disclosures and reshape the secondary market for mortgage financing.