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Despite a last minute reprieve that delayed the Fed's loan officer compensation rule from taking effect at least until Tuesday, the industry's chances of overturning the rule are slim.
April 1 -
An appellate court in Washington late Thursday night granted a stay delaying implementation of the Federal Reserve's loan officer compensation rule until April 5.
April 1 -
U.S. District Court Judge Beryl Howell late Wednesday denied a preliminary injunction aimed at halting the Federal Reserve's loan officer compensation rule, dealing loan brokers a major blow.
March 30 -
Little attention has been paid to the added risks for banks and wholesale lenders of buyback requests if loans they fund do not comply with the Fed's new broker pay rules.
March 29
A U.S. Appeals Court in Washington late Tuesday night lifted a stay halting the Federal Reserve's controversial loan officer compensation rule, saying the plaintiffs in the case — two broker trade groups — did not "satisfy the stringent" requirements required to continue that stay.
As of Wednesday night, new loan officer compensation rules promulgated by the Federal Reserve Board became the law of the land, putting restrictions on how independent loan brokers and bank loan officers can earn a living.
Marc Savitt, president of National Association of Independent Housing Professionals told National Mortgage News Wednesday morning that he will not give up fighting the rule, but also predicted that "A lot of brokers will go out of business because of this." He added that, "A lot of loan officers working for brokers — and bankers — will make substantially less."
However, NAIHP plans to lobby the new Consumer Financial Protection Bureau to change the rule once that new agency opens for business in late July. (NAIHP and the National Association of Mortgage Brokers sued the Fed last month, seeking to block the rule. They lost the first round in court but were granted a temporary stay on March 31, a day before the rule was set to go into effect.)
One of Savitt's biggest problems with the pay restrictions is the ban on brokers cutting their fees and passing on that cost savings to the consumer as an enticement for the consumer to close with them.
Under the rule, brokers cannot be compensated by both lenders and the consumer in the same transaction and cannot be paid based on the loan's terms and interest rate.
In their court filings the trade groups claimed the Fed lacked the statutory authority to promulgate some of the rules; that the rules do not have a "rational basis"; and that the central bank failed to conduct a proper analysis on how the brokerage industry would be affected under the Regulatory Flexibility Act.
