OCC Eyeing Broker Fee Disclosure

The Office of Comptroller of the Currency is checking national banks that fund brokered loans to make sure the mortgage brokers are properly disclosing their fees to consumers as outlined in a 2003 advisory letter. "We have been reviewing bank compliance with this particular section of our guidance recently since it has been more than five years since the advisory letter was issued," Michael Bylsma, the OCC's director of consumer law, told a Mortgage Bankers Association compliance conference. The OCC guidance calls for national banks to enter into written agreements with mortgage brokers to ensure they make loans that meet the consumer's "needs, objectives and financial situation," Mr. Bylsma said. These agreements "should limit total broker compensation to prevent inappropriate steering," he added. The 2003 advisory letter also calls for disclosure of broker fees to consumers, including a written agreement between the borrower and the broker. The broker's fees should be conspicuously disclosed in the agreement that is signed and dated by the consumer before the broker starts work. "National banks should have a process in place to review the written agreements," Mr. Bylsma said. The OCC officials declined to comment on the level of compliance with the advisory letter. National banks originated 45% of all home mortgages in 2007, according to the OCC.