Lawsuits filed this week by two broker trade groups challenging the Federal Reserve's loan officer compensation rule are expected to be combined into one case by the presiding judge.
Marc Savitt, president of the National Association of Independent Housing Professionals, Friday morning said he anticipates the judge will combine the cases, perhaps by the weekend or Monday.
"They Fed has made a motion," he told National Mortgage News. "They want to consolidate the cases." (To date, the Fed has declined to discuss the lawsuits.)
NAIHP and the National Association of Mortgage Brokers this week sued the Fed, filing separate claims in U.S. District Court in Washington, seeking to block the rule, which goes into effect April 1.
Both lawsuits seek temporary restraining orders against the Fed, challenging different aspects of the rule, including what they call "implementation" and "enforcement."
In its claim, NAMB says that in "promulgating restrictions" on LO comp the Fed "failed to consider the immediate, catastrophic and irreparable harm the Rule would cause mortgage brokers, individual loan officers, the mortgage broker industry and consumers."
As published, the Fed's regulation mandates that payments to a loan officer (be it a loan broker or otherwise) cannot be based on a loan's interest rate or other terms. The Fed also is banning LOs from receiving compensation payments from both a borrower and a lender on the same deal. (See the Monday paper edition of NMN for complete details.)
