NAMB Responds To RESPA Lawsuit Decision

tional Association of Mortgage Brokers (NAMB) has expressed [link=][u]disappointment[/u][/link] with the U.S. District Court's decision on its lawsuit against the Department of Housing and Urban Development (HUD) over the Real Estate Settlement and Procedures Act (RESPA) final rule issued in November 2008. District Court Judge James Robertson ruled in favor of HUD, stating that the agency, in fact, did not violate the Administrative Procedures Act before issuing the RESPA final rule, and that NAMB did not demonstrate that HUD acted in an "arbitrary and capricious" manner. "District Judge Robertson's decision effectively guarantees that the consumer will continue to be confused during the loan selection process," argues NAMB President Jim Pair. "NAMB's legal challenge against the RESPA final rule was an attempt to ensure all loan originator competitors uniformly provide information to consumers for them to proficiently shop for a loan." The NAMB says two studies conducted by the Federal Trade Commission in 2004 and 2007, and a Federal Reserve Board (FRB) study conducted in 2008 underscore the flawed position HUD has taken to only require certain origination channels to disclose indirect compensation. All three studies concluded that inconsistent disclosures confuse consumers and, in many cases, cause them to choose a more expensive loan, the trade group says. The FRB has acknowledged that indirect compensation, known as "overages" or "service release premiums," which is paid to lenders, continues to go undisclosed to consumers. The FRB recently issued a proposed rule to make changes to Regulation Z under the Truth in Lending Act , and would require this type of indirect compensation to be included in new disclosures to consumers during the mortgage transaction process. "Mortgage brokers have been disclosing indirect compensation since 1992," adds Pair. The Federal Reserve deserves great credit for recognizing that all origination channels receive indirect compensation and, as such, requiring that all competitors be treated the same regarding its disclosure to consumers." SOURCE: [link=]NAMB


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