NAMB Criticizes Regulation Z Amendment
In a letter to the Federal Reserve Board, the National Association of Mortgage Brokers (NAMB) said that certain aspects of the proposed rule to amend Regulation Z would impede market competition. Section 404 of the Helping Families Save their Home Act of 2009 took effect in May and requires a 30 day notice to mortgage borrowers of their loans being transferred for securitization. Called Regulation Z, the Fed’s interim final rule enforces the requirement under the Act. “As currently written, the Proposed Rule will undoubtedly cause unintended consequences that will hurt consumers and the housing market,” said NAMB President Jim Pair. “The Board has failed to consider how these proposals will impact an already significantly changed mortgage landscape.” The NAMB recommended the board be consistent with other proposed financial reform until Congress acts on the legislation to create a Consumer Financial Protection Agency under H.R. 4173. “NAMB is seriously concerned with The Board’s proposals on originator compensation because they limit a consumer’s choice in deciding how to finance a mortgage loan,” said Pair. Commentary from the law firm, K&L Gates addressed the “ambiguities” of Regulation Z. “Section 404 does not expressly authorize the Board to issue regulations interpreting its scope, but the Board nevertheless decided to issue the Interim Rule under its general [Truth in Lending Act] rulemaking authority,” K&L Gates said in an alert. Pair of the NAMB said that whether or not it was the board’s intent, the proposals pick winners and losers within the marketplace by only regulating how some are compensated. “Small businesses offering mortgage loan origination services will be negatively and disproportionately impacted by the Proposed Rule,” Pair said. “NAMB is also disappointed in the Board’s characterization of payments to mortgage broker companies as ‘unfair and deceptive trade practices’ with the knowledge that lenders, banks and credit unions receive the same such payments but are not categorized in the same manner.” Write to Jon Prior.