If he had a half-million dollars of his own, Roy DeLoach said he would be filing suit to stop the Federal Reserve Board’s loan officer compensation rule because of its anti-competitive nature.
DeLoach said this was his own opinion and not the position of the National Association of Mortgage Brokers, the trade group which he serves as chief executive. The rule “will destroy” mortgage brokers and small businesses, he said. “Hold on, the ride is going to get a lot rougher.”
Speaking at the Northeast Conference of Mortgage Brokers in Atlantic City, N.J., he explained NAMB at first thought the rule was workable, but no longer. He compared it to sailboat racers getting the angles on the competition. The rule, he said, gives those angles to other larger mortgage distribution channels.
Thus, the rule shows the Fed does not understand the mortgage business at all in terms of competition, he said. Another area of contention for DeLoach is the steering provision in the rule singles out broker companies, but not other origination entities. He asked why should mortgage broker companies be treated differently from mortgage banker companies. “Companies don’t steer, people steer,” he continued.
As for the Home Valuation Code of Conduct, one triumph for the broker industry is it got Congress to mandate a sunset to the legal settlement as part of financial reform bill. In reality, DeLoach said, HVCC is not going away, which is why he terms what the brokers got as an “optic victory.”
But where brokers are looking to have an impact in the new appraisal rule is in the area of portability, where DeLoach believes there will be changes. In a parting shot, he said, “HVCC, hands down, is the most anti-consumer piece I’ve seen in a long time.”
Speaking about the financial reform bill, Jack Konyk, the executive director of government affairs at the law firm of Weiner Brodsky Sidman Kider, commented that while much of the bill had been debated in various forms in Congress for at least six years, there were parts that were negotiated at 2:30 in the morning, so there was language in it that had not been seen before.
However, what he called “a silver lining” about the law is that instead of four agencies that don’t work together writing rules and regulations that conflict with each other, the task will now fall to a single agency.
Later during the session, Konyk commented Congress might have tired of the Fed and the Department of Housing and Urban Development butting heads on such things as Truth-in-Lending reform.
Both Konyk and DeLoach believe there will be technical amendments to the law to clean up the bill. DeLoach believes there will be three technical corrections made, with the first coming in the lame-duck session.
Another issue that DeLoach believes is hurting the market is lender overlays being placed on Federal Housing Administration-insured products. Lenders are placing stricter criteria for these loans than the agency guidelines call for. These overlays are hurting the market, he said, but he doesn’t know they will be dealt with.
