WASHINGTON-The National Association of Mortgage Brokers said the financial reform plan proposed by President Obama has one flaw in that it attempts to tie mortgage broker compensation to the long-term performance of securitized loans.
Meanwhile in its response, the Mortgage Bankers Association pushed its Mortgage Improvement and Regulation Act proposal, which it said would create a regulator for independent mortgage bankers and brokers, funded by the industry itself.
MBA chairman David Kittle said in a statement, "We will continue to work with policymakers on the idea that all participants in the mortgage origination process should have a financial interest in making sure a borrower has a sustainable mortgage payment, without putting certain business models at a competitive disadvantage."
From the brokers' point of view, the proposal shifts the risk of poor underwriting from the mortgage lender to the mortgage broker "without an increase in compensation for that shift," said Marc Savitt, who was president of NAMB at the time.
The group said it welcomes transparency and the proposed Consumer Financial Protection Agency would provide that and level the playing field. It also reiterated the position that all industry participants, not just mortgage brokers, should disclose their compensation from a loan purchaser.
However, "proposals to standardize mortgage products could have serious consequences for consumers shopping to find the most suitable and cost effective loan," Mr. Savitt said.
From the consumer side, the Center for Responsible Lending said it supports the creation of CFPA. "The same rules must apply to similar products across all financial institutions. Such consistency is only fair. And we strongly support the position that states must be free to make and enforce laws that are even stronger than those set by the federal agency when they determine that's necessary to protect their own residents," said CRL president Michael Calhoun.
Meanwhile, the National Association of Exclusive Buyers Agents is asking Congress to include real estate agency language in legislation related to mortgage lending reform. John Sullivan, president of the group, said, "Too many consumers have no idea that when they contact an agent listing a home, that agent must do everything possible to achieve the best outcome for the seller. As a result, these consumers have no one involved from the beginning of the transaction who can advise them on negotiating techniques, price points or the acquisition of an appropriate loan."