The National Association of Mortgage Brokers is expected to file suit against the Federal Reserve Board Wednesday morning, seeking to block the agency's controversial loan officer compensation rule.
Late Tuesday night NAMB president Michael J. D'Alonzo told National Mortgage News that the civil complaint would be filed in U.S. District Court for the District of Columbia by noon.
NAMB's complaint is the second such suit filed this week against the Fed. On Monday the National Association of Independent Housing Professionals sued. (The Fed had no comment about the lawsuit.)
Both trade groups are seeking temporary restraining orders against the central bank.
Under the regulation — which becomes operatives April 1 — payments to a loan officer (be it a loan broker or otherwise) cannot be based on a loan's interest rate or other terms. Also, the Fed is banning LOs from receiving compensation payments from both a borrower and a lender on the same deal.
D'Alonzo told NMN "it's the definition of what an LO is that we have a problem with. Entities, the company itself, are defined as an LO. Banks and mortgage bankers are not considered an LO under the rule."
The Fed's point man on the LO rule, Paul Mondor, is slated to speak at an upcoming NAMB legislative conference. D'Alonzo said he expects Mondor will speak, despite the legal filing. "We still have a good relationship with the Fed," he said. "He's welcome at our meeting."
Loan brokers account for roughly 10% of mortgages originated today compared to 30% three years ago, according to figures compiled by the Quarterly Data Report.
