Mortgage Brokers Group Blasts CFPB’s Compensation Rule

13168_delinquencies Mortgage Brokers Group Blasts CFPB's Compensation Rule The National Association of Mortgage Brokers (NAMB) has come out against the new loan officer compensation rules issued by the Consumer Financial Protection Bureau (CFPB), stating that the rule will not benefit consumers.

‘This is the very opposite of the CFPB's purpose,’ says NAMB President Donald J. Frommeyer from Amtrust Mortgage Funding in Carmel, Ind. ‘This rule, together with the qualified mortgage (QM) rule that was recently released, will destroy competition by eliminating the ability of small business mortgage brokers to compete with larger creditor lenders. NAMB will continue to examine the CFPB's 541-page regulation on loan originator compensation requirements under the Truth in Lending Act and make additional comments in the next few days.’

NAMB feels that if the CFPB's intent is to take away a mortgage broker company's ability to compete, then the loan officer compensation rule, along with the recently-released QM regulations, is the perfect way to eliminate smaller business operations from the marketplace.

"The CFPB has failed to realize that a mortgage broker company does not get all of the fees for arranging a loan," says Frommeyer. "The mortgage broker company has office rent, utilities, employees, payments to their loan originators, copier expenses, computer expenses and other items of overhead to pay out of their commission received from the creditor, yet the creditor can simply increase their profits on the sale of the mortgage loan in the secondary market without any regard to the consumer.

‘The limitations in this regulation, along with the new rules on qualified mortgages, assures higher prices to consumers and less competition in the marketplace,’ Frommeyer continues. ‘This rule tugs at the heartstrings of small American businesses, as many of our shops are.’

Frommeyer adds that the CFPB's rule could also jeopardize the viability of the broker market.

‘It seems that every part of these rules imposed by the CFPB are intended to make it increasingly difficult for the small business to operate,’ he says. ‘Most of the 10,579 broker companies in the nation have five or less employees. We operate in all of the small markets that the creditors do not want to go to or have offices in. Yet these are the companies that the CFPB seems to be singling out. They are deciding who the winners are and who the losers are.’


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