In a hearing in U.S. District Court on Tuesday, attorneys for the plaintiffs provided arguments supporting a temporary restraining order and preliminary injunction ceasing the implementation of the Loan Originator Compensation rule on Friday, April 1, 2011. The National Association of Mortgage Brokers (NAMB) expressed confidence that the hearing provided them the opportunity to respond to questions posed by Judge Beryl Howell.
“NAMB representatives were given the opportunity to present proof before Judge Howell and provide her with additional information to delay the FRB’s rule on LO compensation and grant an injunction,” said Mike Anderson, CRMS of Essential Mortgage, Government Affairs Committee Chair of NAMB.
The lawsuit, that incorporates consolidated filings by both NAMB and the National Association of Independent Housing Professionals (NAIHP), seeks to temporarily halt the implementation of the rule until the case has been litigated. NAMB specifically requested that Judge Howell issue an order on the temporary restraining order prior to Friday.
Additionally, NAIHP filed a final brief in response to the Federal Reserve's response to the case. NAIHP argues that the Fed has failed to adequately defend the question that this rule exceeds their authority under the Truth and Lending Act (TILA). The filing states that section 129 of TILA grants specific authority to this type of rulemaking to clearly defined, high cost mortgages. Likewise, NAIHP disputes the Fed's claim that they were compelled by the Dodd-Frank Act to promulgate the rule, indicating that the Act actually assigned authority to the new Consumer Financial Protection Bureau (CFPB). The goal of the Act was to provide the CFPB with sufficient lead time to harmonize regulatory actions of various agencies.
Beyond the question of authority, the NAIHP response states that the Fed has failed to demonstrate that current compensation practices are unfair, deceptive or abusive, nor have they demonstrated any injury to consumers.
The NAIHP filing also calls for a temporary restraining order and a preliminary injunction be granted barring enforcement of the final rule until the case is resolved.