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.
A posting Wednesday afternoon on the website of the National Association of Independent Housing Professionals, one of the two plaintiffs in the case, stated: "Like all mortgage professionals throughout the country, we are disappointed with Judge Howell's decision. To deny every argument presented to the court and ignore the Board's own admissions in their answer, is beyond comprehension. NAIHP is preparing to appeal to the Circuit Court." The other plaintiff is the National Association of Mortgage Brokers."If they do appeal, it will have to be an expedited appeal," said Glen Corso, managing director of the Community Mortgage Banking Project, which filed an amicus brief in the case.
As things stand now, the LO comp rule will become operative Friday, April 1. Among other things, the rule bans broker compensation based on the rate and terms of the loan, disallows payments from both consumers and wholesale funders on the same deal, and prevents brokers from offering discounts to consumers by earning less money on a transaction.
Last Friday NAMB filed for a temporary restraining order and then changed its filing to a preliminary injunction on Tuesday. Brokers alleged that the LO comp rule is misguided, will destroy the brokerage industry, and may be illegal.
Their motion was filed in the District of Columbia.
