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March
2002
NAMB Submits Model Originator Disclosure
Form to HUD
NAMB is proud to announce that on behalf of its 13,000 members, a
proposed "Mortgage Loan Origination Disclosure Agreement" was
delivered to the Department of Housing and Urban Development Jan. 24. It
is an extension of the NAMB/MBA Model Loan Origination Agreement
developed and approved by NAMB and MBA in 1998, which is in use today by
many mortgage brokers and lenders.
The
NAMB lobby team has been working Capitol Hill and HUD for months to position
the NAMB disclosure as the best option for consumers and industry alike.
This is the latest step in a long series of activities including Joe
Falk's testimony before the Senate Banking Committee, the sharing of NAMBs position with the House Financial Services
Committee and negotiations with HUD.
The
NAMB disclosure, to be given at or before application, focuses on two key
areas: the nature of the relationship between originator and customer and
how an originator can be compensated directly and/or indirectly. The
disclosure applies to any originator which brokers, transfers or sells a
loan within 180 days after settlement. The agreement states that all
estimated compensation, and its direct affect on a borrower's interest
rate on the loan, their monthly payment, and the cash required to close,
is disclosed in the same way by mortgage brokers, mortgage bankers and
other retail originators through the Good Faith Estimate.
The
Mortgage Bankers Association of America, Consumer Mortgage Coalition, America's Community
Bankers and American Bankers Association are in favor of a form which
requires disclosure only of mortgage brokers
compensation.
NAMB
disagrees. NAMB believes that a broker only disclosure will create more
confusion for consumers and does not appropriately reflect the reality of
the current marketplace. Mortgage companies routinely originate various
types of transactions; some that are considered brokered, and others that
are considered lender. Additionally, when a customer goes in to a mortgage
company sometimes the originator believes that an application will be
funded as a lender transaction, only to find that as the processing is
completed the nature of the transaction changes to a broker transaction.
Confusion will be the result of the dual system proposed by MBA/CMC. NAMB
also fears that unscrupulous operators will hide behind a line of credit
and fund lender transactions only in an attempt to evade a broker only
disclosure.
NAMB
firmly believes that consumers are best served with a consistent
disclosure process that is equal among originators and that will
facilitate the shopping and comparing process of applying for a mortgage
loan. For HUD to accomplish its goal of protecting consumer interests, we
believe that an all originator form is the only logical solution.
Visit NAMBs Website at www.namb.org to view the proposed
disclosure. The information is available exclusively in the "members
only" section.
NAMB's Voice Being Heard at HUD
Getting "face-time" with influential legislators and decision-makers
in Washington is an every day
challenge for any industry or trade group. When it does happen, a
twenty-minute meeting will often turn into ten minutes because of other
pressing issues by the decision-makers.
On Jan.
28, NAMB had a scheduled 30-minute meeting with three HUD
decision-makers. NAMB President Joseph Falk, CMC, CRMS, was the key
representative for NAMB along with three other members of NAMB's Legislative Team, Rick Spees,
Robert Lotstein and Kay Kinney. In actuality,
the thirty minutes turned into two and a half hours with seven
influential HUD advisors. This amount of time is priceless in Washington DC, and it clearly
underscores that the Department of Housing and Urban Development (HUD)
wants to have the advice and input of the mortgage brokers. While we all
anxiously await HUD's policy on disclosures, it's great to know that NAMB
has such a respected voice here in Washington.
Senator Sarbanes Urges New Rules for
Mortgage Brokers
Senate Banking Committee Chairman Paul Sarbanes (D-MD) has sent a letter
to HUD Secretary Mel Martinez, stating that he believes there are
widespread abuses of yield spread premiums that are causing consumers to
pay higher interest rates, and urging him to establish new rules to
prevent mortgage brokers from abusing YSPs. The
letter was dated Jan. 14. It includes the entire transcript of the
Banking Committee's January 8 hearing on YSPs.
"In
my view," states Sarbanes, "this hearing laid out a conclusive
case that there is widespread misuse of YSPs in
the current marketplace, the misuse affects all segments of the mortgage
market, and the misuse of YSPs raises
additional barriers to minority families seeking to become homeowners. At
the same time, the hearing also made clear that there is significant
agreement as to how these problems can be addressed in the future."
Sarbanes
urges HUD to require mortgage brokers to disclose their total
compensation at the time of application, and to require brokers to allow
the borrower to choose whether to pay the compensation in cash, from the
proceeds of the loan, or through a YSP. He also
urges HUD to establish through regulation that mortgage brokers are
agents of the borrower, saying that "this is how brokers describe
their role in the mortgage process."
NAMB Endorses Rep. Ney's
Proposed Bill to Make FHA Down Payment Formula Permanent
Rep. Bob Ney (R-OH), has introduced a bill to
permanently extend a down payment formula that makes FHA single-family
loans more affordable, especially in high-cost areas. NAMB endorses HR
3661, which will make permanent the simplified formula currently used by
the FHA to calculate proper loan down payments. The present simplified
calculation tool will expire Dec.
31, 2002. The old down payment formula is harder to explain to
consumers, and makes it harder to estimate closing costs, according to
mortgage brokers. The MBA and National Association of Realtors also
support the bill.
$31.5 Billion HUD Budget Expands
Homeownership Opportunities
President Bush's proposed Fiscal Year 2003 budget
includes $31.5 billion for HUD to help more Americans become homeowners,
to provide additional rental assistance, to protect vulnerable people,
and to stimulate economic development and job growth across the nation.
This budget request represents an increase of $2.1 billion over HUD's
initial FY 2002 budget. The President's budget proposal includes $200
million for the American Dream Downpayment Fund
to continue to help more Americans realize the dream of homeownership.
Administered under HUD's HOME program, this fund will help an estimated
40,000 low-income families a year to become first-time homeowners. The
spending plan also includes resources to combat the practice of predatory
lending, prevent housing discrimination and continue reforming the homebuying process to eliminate hidden fees paid by
consumers. http://www.hud.gov/news/release.cfm?content=pr02-019.cfm
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