Bill Would Require Broker Fee Disclosure

Mortgage brokers would be required to disclose all fees they receive from borrowers and lenders seven days prior to closing under a bill that Rep. Luis Gutierrez, D-Ill., plans to introduce soon.The Mortgage Broker Licensing and Predatory Loan Disclosure Act calls for clearer disclosures on exotic and subprime mortgages. It also establishes liability for brokers that violate the new law. "The legislation will bring accountability, transparency, and stricter standards to this loosely regulated industry," said Rep. Gutierrez, who is a senior member of the House Financial Services Committee. "It will ensure that people understand the hazards of high-risk loans and the subprime market, and it will ensure that mortgage brokers are properly licensed and are operating in good faith." The bill also requires all mortgage brokers to be bonded, and it directs the Department of Housing and Urban Development to establish minimum licensing requirements for mortgage brokers. The National Association of Mortgage Brokers says it supports better and clearer disclosures. However, brokers should be treated like other lenders and not singled out, according to the association. "Everybody should live under the same standards," NAMB president Harry Dinham said.