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| A legal attempt by the nation’s mortgage brokers to force equal disclosure of yield spread premiums, overages and service released premiums by mortgage brokers and mortgage bankers ended in disappointment.
U.S. District Court Judge Robertson ruled in favor of the U.S. Department of Housing and Urban Development in a lawsuit filed by the National Association of Mortgage Brokers, the trade group announced yesterday. Government agencies are subject to the Administrative Procedures Act — a rulemaking process agencies must go through when they make rules that will have a widespread impact. NAMB alleged that HUD violated the act when it issued a final rule on the Real Estate Settlement and Procedures Act. The association cited studies from the Federal Trade Commission and the Federal Reserve Board that reportedly prove HUD’s requirement that only some channels disclose indirect compensation is harmful. The trade group said proposed Regulation Z changes by the fed would require overages and service-released premiums earned by mortgage bankers to be disclosed — a requirement NAMB applauds because it puts brokers on par with mortgage bankers. “Mortgage brokers have been disclosing indirect compensation since 1992,” NAMB President Jim Pair explained in the statement. But NAMB said the judge found that the brokers didn’t demonstrate how HUD acted in an “arbitrary and capricious” manner, as alleged in their complaint. He ruled that HUD did not violate the Administrative Procedures Act. “District Judge Robertson’s decision effectively guarantees that the consumer will continue to be confused during the loan selection process,” Pair stated. “NAMB’s legal challenge against the RESPA final rule was an attempt to ensure all loan originator competitors uniformly provide information to consumers for them to proficiently shop for a loan.” |
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