Rep. Barney Frank, D-Mass, late this week introduced legislation that allows loan officers at mortgage brokerage firms to be more competitive when customers are shopping for a mortgage.
“The bill's intent is to permit a reduction in a mortgage originator's employee's compensation when it results in a benefit to consumers who are shopping for the best mortgage terms,” according to a summary of the bill known as H.R 4076.
Two California congressmen, Gary Miller (R) and Pete Stark (D), are co-sponsors of 'The Loan Originator Compensation Bill.'
When a LO makes an offer to a customer under current law, they cannot make a counteroffer when competitors offer a better mortgage rate. Mortgage brokers often complain that they have to standby while banks undercut their pricing.
The Frank bill would change that -- provided the consumer ends up with an annual percentage rate (APR) that is lower than the original offer.
