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Roy DeLoach (left) and John Councilman are trying to communicate with the CFPB. Photo: David Braun.
Roy DeLoach (left) and John Councilman are trying to communicate with the CFPB. Photo: David Braun.

Brokers Seek Shift In CFPB Fee Cap

NOV 25, 2013 12:50pm ET
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The National Association of Mortgage Brokers is looking to get the Consumer Financial Protection Bureau to modify the 3% fee cap by showing the agency how its members are able to rebate funds to their clients.

Brokers returned $130 million to customers in 2012, president Don Frommeyer revealed at the NAMB National meeting in Las Vegas. That will go away if the 3% cap established under the qualified mortgage rule is remains as proposed, he says.

NAMB wants the cap increased. Otherwise smaller mortgage brokers will not be able comply and remain in business, Frommeyer says.

Frommeyer, along with president-elect John Councilman, vice president Rocke Andrews, treasurer Andy Harris, secretary Kay Cleland and lobbyist Roy DeLoach discuss QM and other regulatory issues with managing editor Brad Finkelstein in this portion of the Origination News roundtable.

FINKELSTEIN: Do you see CFPB making to changes to QM before January? Or will the rule stay the same and then the agency make changes as they see what happens?

FROMMEYER: I think we will have something before Jan. 1. I’d like to say we looked in our crystal ball and found out they were going to do this or do that. But we’re trying to give them as much information so that they could make a logical decision in increasing the 3% to 3.5% or 4%. Or is (the answer) giving us a one-year exemption until we get this thing worked out? But I think they are trying to understand and delve really into exactly how this thing works and the disparity you have sometimes between the correspondents or mini-correspondents and the mortgage broker. When we visited them we gave some information which brought up the mortgage rebate and they’re listening. We’re going to send them a letter (with the information about how much is being given back to the customer) and we hope that helps them when they’re making their decision.

COUNCILMAN: The biggest fear I have is that QM keeps the government 100% in lending exactly as it is (now) and we never get other programs into the system. There are so many people afraid of doing mortgages because of the regulations not being clear or being too complex and we’re perpetually stuck in the paradigm we’re in right now. It is something that could derail a lot of the future growth in the housing industry and possibly the economy in general. There are a lot of people who I think are great credit risks who don’t get a loan today and that is not something that is good for the economy.

DELOACH: The CFPB is data driven and what we’ve set out to do is to show them here is the data, here is how the market is reacting to things and here is the math. If you do the math, the bottom line is you are actually hurting the consumer interests you are trying to help. It is our job to explain to the CFPB those realities and we also understand they have under the Dodd-Frank Act the ability to make these changes. Our job is to give them enough information and data so they can understand what they are doing and if there is any unintended consequences.

COUNCILMAN: We are not asking for any special favors. We are simply asking for parity and that isn’t a whole lot to ask for.

HARRIS: What CFPB can do between now and January, the most important thing is making things transparent for the consumer. If they are going to get a mortgage, they need to know what their options are and that needs to look the same wherever they go. The consumer is going to the originator, whether that originator is employed by the creditor or not employed by the creditor, whether they work for a depository or a nondepository, the consumer is going to an originator and they are going to get a disclosure. That disclosure has to look the same (no matter who the originator works for). It is the same product, there is no reason why it should be treated less or unfairly based on who is originated the loan. I have to spend so much time educating the borrower on how it works and how our company is paid by the creditor. It has to be transparent and all level so we have competition in the marketplace benefitting the consumer. We need to get off of the use of the terms banker or broker, it is just very confusing and very deceptive to the consumer.

DELOACH: With more companies today brokering half the loans and banking half the loans inside of their own shops it is more important that the forms be designed where you can make changes. A loan starts as a banked loan and then things change and the originator decides it is better off for the consumer if it was brokered. That form needs to make sure the consumer is not confused about what is going on.

FINKELSTEIN: With the new rules scheduledto go into effect on Jan. 10, do you think it is important for mortgage originators to educate their customers on things like the debt-to-income ratio?

FROMMEYER: I think if you’re a mortgage broker and a customer walks in, that is part of what you do with them.

CLELAND: When we are doing a loan application now, we go through all that stuff. We go through the debt ratio. We take their budget and we show them their income and their assets. That is one of our responsibilities for the consumer right now. We want to make sure they know exactly what they are getting and the position they are in right now.

HARRIS: If a loan fails the test (right now) it doesn’t mean it can’t be an agency backed loan (because of the exemption in the rule).

Comments (7)
Give it up Frommeyer. The CFPB will NOT modify their position. As a matter of fact, your argument that brokers won't be able to rebate money to the consumer is a dumb argument. You are only able to rebate because you are overcharging customers in the first place. I for one will not shed a tear when every broker is out of business! Period!
Posted by Tom W | Monday, November 25 2013 at 4:25PM ET
Go to hell Tom. It must be nice to sit in an office and have customers provided to you by a bank. You must also have all perfect deals with people with 20% down and will pay whatever the closing costs are and don't ever need a rebate to help with cash to close. My guess is you're an order taker that could never make it in our world where we have to get our own business. I would however shed a tear if consumers were stuck with hacks like you as the only LO's left in the industry...
Posted by Michael S | Monday, November 25 2013 at 8:09PM ET
Tom- you are a turd. Nobody is charging more dumb ass. Comp is a set percentage and the borrower owns the rate sheet. Their choice. It comes down to who the investor is upon selection on whether there is a credit or not. You or your BANK probably have it cooked into your rate sheet while you are the one burying the consumer. Sounds like you've gotten your ass kicked a few times by us brokers and while we kicked your ass we made twice as much. We welcome the challenge. Bring it turd...
Posted by brkrsmashesbanker | Tuesday, November 26 2013 at 1:27AM ET
Well, neither of you clowns (Mike W. & Mike S) have a freakin' clue how lenders set pricing, not a friggin' clue! Nor do I "sit around" waiting for customers to come to me. I bust my ass every day almost all day hustling deals and I have NEVER lost one to a broker, NOT ONCE! At one time I owned a very successful brokerage house but that was many moons ago. I read the writing on the wall that brokers were a target and a dying breed. I then hooked up with a great community bank and I've been kicking butt and taking named for 3 years now and I have to say that when I come across a "broker deal" I beat it EVERY time. Not just with rates and pricing but SERVICE! Get a life and realize that you ARE overcharging on rate because that is the ONLY way to give a rebate, I don't care how you look at it morons!
Posted by Tom W | Tuesday, November 26 2013 at 12:12PM ET
Wow Tom! Brokers must really be eating your lunch!!!! LMBO!! Why don't you try being half the loan officer professional brokers are and then you wouldn't feel so threatened.....you are a joke!! Wee wee wee.....
Posted by Susan Z | Friday, December 13 2013 at 9:49PM ET
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