NAMB Vows to Fight New RESPA Ruleby Tim Manni
The National Association of Mortgage Brokers (NAMB) is up in arms over the recently updated Real Estate Settlement and Procedures Act (RESPA). The U.S. Department of Housing and Urban Development’s (HUD) revision to the Good Faith Estimate (GFE), a simplified three-paged document designed to help borrowers better understand the terms and conditions of their home loan, has the NAMB President Marc Savitt promising, “We are not going to stand for this,” wrote National Mortgage News.
There are a few components to the change of regulations that has the NAMB particularly upset. Overall, the NAMB feels “HUD, despite taking significant steps to address RESPA reform, failed to recognize the need for a unified, comprehensive approach towards accomplishing a simplified mortgage process,” said Savitt. In particular, the NAMB claims HUD failed to create a level playing field between all mortgage-loan originators — the GFE discloses the yield spread premium (YSP) (the originator’s commission) as a mortgage-broker fee, but not as an originator fee for ALL originators. The NAMB feels brokers should not be implicitly singled out.
While no one argues that brokers have the right to make money, the argument holds little water with some lawmakers that criticize HUD hasn’t done enough to stop predatory lending practices. Some have argued many brokers haven’t fully disclosed their YSP to borrowers, allowing them to pad their commission on the loan:
In a release, [Assemblyman Ted (D-Torrance.)] Lieu said “HUD’s announcement … is a step in the right direction, but it fails to stop the perverse incentives – such as abuse of yield spread premiums – that continue to exist in today’s mortgage market to reward risky and inappropriate behavior. The last eight years have shown that the disclosure-based deregulation polices embraced by Wall Street have resulted in financial disaster.”
“We have several ideas up our sleeves but we’ll wait for the new administration to take over before we do anything,” Mr. Savitt said to National Mortgage News.