Two brokerage trade groups are expected to file an appeal in Washington by close of business Thursday, challenging a ruling that paved the way for the Federal Reserve Board to proceed with its loan officer compensation rule.
In her 46-page ruling, U.S. District Court Judge Beryl Howell late Wednesday denied a preliminary injunction aimed at halting the rule, while affirming the central bank's authority to issue new regulations.
Judge Howell, while recognizing the potential harm the rule will cause loan brokers, wrote from the bench that the plaintiffs failed "to show that the Rule was issued without authority or is arbitrary or capricious." Earlier this month, the National Association of Mortgage Brokers and National Association of Independent Housing Professionals filed a claim, first for a temporary restraining order, and then an injunction.
The appeal will be filed in Circuit Court in Washington with a three-judge panel overseeing the motion.
NAMB president Mike D'Alonzo said that despite the Wednesday decision, loan brokers will continue on facilitating loans. "Brokers have always found a way to survive," he said. "It's just going to be a little different on how we do business."
He and NAIHP chief Marc Savitt vowed to carry on the appeal process as far as they can take it. "We're going to go as far as we can with this thing," said Savitt.
Set to go into effect Friday, the LO comp rule bans broker compensation based on the rate and terms of the loan, disallows payments from both consumers and wholesale funders on the same deal, and prevents brokers from offering discounts to consumers by earning less money on a transaction.
