A controversial rule that governs how mortgage loan officers are paid is in effect after the U.S. Court of Appeals for the District of Columbia dissolved a temporary stay of the rule’s implementation Tuesday. The stay was initially in play after the National Association of Mortgage Brokers and the National Association of Independent Housing Professionals filed briefs with the appellate court asking for the rule — which was scheduled to take effect April 1 — to be temporarily stayed pending appeal. The groups are arguing on appeal that the Federal Reserve does not have the authority to regulate an entire industry. Technically, the LO compensation rule came into effect last Friday. The stay blocked its enforceability. Patton Boggs attorney Anthony Laura, said “the appeals court dissolved its temporary stay of the effectiveness of the Fed’s rule restricting certain loan originator compensation practices, which was to take effect on April 1.” The temporary stay was granted while the court deliberated on whether it would grant a longer stay pending the duration of the NAMB and NAIHP appeal. “Yesterday, it (the Court) denied the stay pending appeal, denied the request for an expedited appeal (putting the appeal on the normal time track), and dissolved its emergency stay,” Laura told HousingWire.com “Hence, the L.O. compensation rule is in effect, and we lawyers must advise our clients that its requirements must be followed.” With the stay now lifted, the two organizations released a note warning loan officers that the rule is in effect. “NAMB and NAIHP has received disappointing news that the appellate court has ruled against our stay,” the two agencies said. “We are taking next actions right away to fight for you (including possible appeal).” The lift of the temporary stay does not effect the issue on appeal. It just means the rule is in effect — rather than on a permanent stay — while the case is pending in court, legal sources say. Write to Kerri Panchuk.