Yesterday’s decision by a federal appeals court will cause “irreparable harm” to small mortgage brokerages. The potential impact of the decision was compared to the implementation of the Home Valuation Code of Conduct.
A decision came late Tuesday from the U.S. Court of Appeals for the District of Columbia Circuit lifting the stay on the loan officer compensation rule.
One of two plaintiffs in the lawsuit, the National Association of Independent Housing Professionals Inc., issued a statement indicating its disappointment in the decision.
“Since the housing crisis began over four years ago, small business mortgage brokers and loan originators have endured an onslaught of new rules and regulations, under the guise of consumer protection,” NAIHP President Marc Savitt stated in the news release. “This specific rule, promulgated by the Federal Reserve Board, will not only cause an immediate increase in mortgage costs for consumers, but will make home ownership cost-prohibitive for others.”
Savitt quoted District Court Judge Beryl Howell, who reportedly said “irreparable harm” will be caused to small businesses.
Savitt pointed to the “appraisal fiasco” that HVCC created — putting “tens of thousands of small-business appraisers” out of business and leaving borrowers with $700 average appraisal fees. He claims that valuation fraud has increased more than 50 percent as a result of the code.
“In this case of originator compensation, the board ignored credible, independent studies, showing mortgage brokers were by far the less expensive option for consumers and instead relied on anecdotal evidence,” Savitt said.
At the end of the news release, the group proclaimed that it will “pursue any and all remedies to remove this rule from the marketplace,” adding, “This fight is far from over.”
Related:
Appeals Court Rules on LO Compensation Rule
A federal appeals court has rendered its decision about whether to continue to delaying the implementation of the loan originator compensation rule while mortgage brokers battle it out with the Federal Reserve Board in federal court.
National Association of Mortgage Brokers, Appellant, National Association of Independent Housing Professionals Inc., Appellant, v. Board of Governors of the Federal Reserve System, et al. Appellee.
Case No. 11-5078, 11-5079 (U.S. Court of Appeals for the District of Columbia).
