Mortgage Brokers Sue Fed to Save Livelihood
The National Association of Mortgage Professionals (NAMB) has sued the Federal Reserve to block a proposed rule that would bar mortgage brokers from being paid by commission on mortgages written.
The financial reform act of last year mandated the rule change, which was aimed at removing incentives to sell borrowers mortgages that would not be in their best interest.
“The Rule's loan restrictions are causing the NAMB and its members immediate, devastating and irrevocable harm,” NAMB wrote in its filing before the U.S. District Court for the District of Columbia. “Mortgage brokers are already losing their life blood–their loan officers–and planning to cease their operations and close their doors as a direct result” of the rule, the association argued.
The group also challenged that the rule permits “banks and lenders” to compensate their mortgage officers with commissions while they were not allowed to continue doing so. “The Board provided no rational basis for distinguishing between these two similarly situated groups, and none exists,” the association wrote.