The Mortgage Bankers Association, in a new comment letter, says it opposes the so-called zero-zero exemption spelled out in the Consumer Financial Protection Bureau’s pending loan officer compensation rule.
The zero-zero exemption would require that mortgage bankers (creditors) and loan brokers make available to borrowers a mortgage “with no upfront discount points, origination points, or fees that are retained by the creditor, broker, or an affiliate of either if commission-based compensation is paid to an originator.”
The trade group says that overall it supports an exemption from the provision of Dodd-Frank that can be read to restrict the payment of a transaction specific commission to a loan originator by a creditor or a brokerage if the creditor or brokerage also receives points and fees from the borrower, but the trade group opposes the zero-zero exemption as currently proposed.
The MBA says many lenders report difficulties in offering the zero-zero option. “There are aspects of secondary market pricing and regulatory concerns that make it difficult to achieve,” it writes in its comment letter addressed to Monica Jackson, executive secretary of the agency charged with sorting out the controversial topic of LO compensation.
Mortgage bankers believe the initiative goes “considerably” beyond the purview of the rule, arguing that the stated purpose of the zero-zero exemption is to help facilitate comparison shopping for mortgages.
The industry also is urging that all fees for third-party services “whether or not they are provided by an affiliate” should be excluded from the calculation of a zero-zero loan and “for that matter, the points and fees calculations for QM and HOEPA loans.”
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