The National Association of Mortgage Brokers this week confirmed that it has ended its legal challenge of the Federal Reserve Board's controversial rule on loan officer compensation and is looking at alternative ways of changing how LOs are paid.
“We decided that we can have more of an impact if we concentrate on working with the CFPB [Consumer Financial Protection Bureau] regarding the LO comp rule,” said NAMB president Mike D’Alonzo.
CFPB is not yet officially up and running, but will be in a few weeks.
NAMB and another broker trade group, the National Association of Independent Housing Professionals, hope to lobby regulators to change certain aspect of the Fed rule.
NAMB and the NAIHP sued the Fed early this spring, hoping to block the rule. The groups lost an initial round in court, won on appeal, but then lost in another round of court battles. NAIHP dropped its claim in early April, leaving NAMB to battle on alone. NAMB officially withdrew its complaint about 10 days ago without issuing a public statement.
NAIHP, too, hopes to lobby the CFPB to make changes to the rule.
Under the Fed rule – which is now the law of the land -- brokers cannot be compensated by both lenders and the consumer in the same transaction and cannot be paid based on the loan's terms and interest rate. The rule also eliminates a broker's ability to make less money on a transaction while giving that cost savings over to the consumer as an incentive to close the deal with them.
