Pair said mortgage brokers have been disclosing yield-spread premiums since 1992, and that NAMB welcomed changes the Federal Reserve has announced to another set of disclosures that are required under the Truth in Lending Act (TILA).
The Fed this week proposed a ban on all incentive payments to mortgage originators that are based on a loan’s interest rate or other terms, regardless of whether the originators are working for direct lenders like banks or are employed as independent mortgage brokers (see story).
To help consumers understand the trade-offs between settlement fees and interest rates, the Fed said it would also revise TILA loan disclosures to factor the cost of most loan fees and settlement costs into the calculation of a loan’s annual percentage rate (APR).
NAMB is not the only real estate industry group to have raised objections to HUD’s proposed RESPA rule changes, which will also limits changes to fees quoted in the GFE before borrowers reach the closing table and provide incentives for loan originators to package settlement services like title insurance with loans.
NAMB, the Mortgage Bankers Association, the American Escrow Association and the American Bankers Association have all called on HUD to withdraw the rule changes and work with the Fed on developing a single set of loan disclosures that meet both RESPA and TILA requirements.
House lawmakers have been sympathetic to those complaints, and in a 300-114 vote May 7 approved a bill aimed at curbing predatory lending with an amendment that would delay HUD’s RESPA rule changes for one year. It’s uncertain whether the Senate will follow suit.
If the Fed and HUD don’t make progress in drawing up uniform loan disclosures, the Obama administration has said its proposed Consumer Financial Protection Agency would develop a uniform mortgage disclosure form and put it forward for public comment within a year of the agency’s creation (see story).
HUD has backed down from one aspect of the RESPA rule that was scheduled to go into place this year — a prohibition on incentives for new home purchases that require consumers to use homebuilders’ affiliated mortgage and title insurance companies.
After HUD was sued by the National Association of Home Builders over changes to the "required use" definition, it said it would go back to the drawing board and draw up a new defintion with the same goal in mind: "To help consumers shop effectively and safely for homes and mortgages, free from the influence of disingenuous discounts and incentives that steer consumers to the use of affiliated businesses" (see story).
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