Mortgage attorneys, consultants, and trade group officials are at odds over the implementation date of restrictions on loan officer/broker compensation-and prepayment penalties-promulgated in the pending Dodd-Frank regulatory reform bill.
As reported on the National Mortgage News website Wednesday, K&L Gates attorneys contend these provisions could go into effect shortly after the president signs the bill. In an alert to its mortgage clients, K&L Gates attorneys note that lawmakers did not instruct the Federal Reserve Board, or the new Consumer Financial Protection Bureau, to issue regulations on originator compensation, which means the changes could go into effect immediately.
Industry officials indicate the K&L Gates interpretation is one possible reading of the statute. However, trade group executives and others now believe a more reasonable reading of the legislative language gives the Federal Reserve Board or the new CFPB the time and option to issue regulations.
If the regulators don't issue regulations, the LO/broker compensation restrictions in the bill would not go into effect until 18 months after the new CFPB is up and running, said Brian Chappelle, a mortgage banking consultant who has followed the bill closely. "Either way, implementation is unlikely until 2011 at the earliest," said Chappelle.
At press time K&L Gates attorneys could not be reached for comment.
