Brokers Worry Bill Curbs YSPs

The House on Thursday passed a mortgage reform bill by a 300-114 vote that curbs incentivized payments to originators and which could totally ban yield spread premium payments — the main source of income for all loan brokers. The National Association of Mortgage Brokers is concerned that the bill "does not preserve consumers' financing options when working with a mortgage broker," NAMB president Marc Savitt said. NAMB chief lobbyist Roy DeLoach said the language in the bill is "very confusing." The wording suggests that a broker's commission and fees cannot be financed into the mortgage interest rate as a YSP and paid to the broker at the closing table. If true, the consumer would have to pay the broker with cash, which would make it very difficult for brokers to compete with banks, NAMB believes. Mr. DeLoach noted the bill still allows banks to receive servicing released premiums when they sell loans to investors and SRPs can be incentivized. "So all the incentivized payments are not going to be removed from the mortgage market," he said.