NAMB is asking its members and other housing industry professionals to respond to the CFPB’s Request for Information Regarding Ability to Repay/Qualified Mortgage Rule Assessment. Deadline for comment is July 31, 2017.
Your input will address the unintended consequences that affect low and moderate income borrowers and small business mortgage brokerage shops. You may use some or all of the following bullet points:
The Dodd-Frank Act’s Qualified Mortgage (QM) points and fee cap harms small business mortgage brokers and low- and moderate-income borrowers. The CFPB recognizes the basis of this error in the new integrated forms where the commissions for the mortgage broker company and mortgage originator employee was removed from the disclosure forms. This is because the payments from the creditor to the mortgage broker company is already reflected in the mortgage rate selected by the consumer. NAMB believes that there is a definitional error in the Dodd-Frank Act affecting the calculation of points and fees for QM’s. We are confident that it could not have been the intent of Congress to include payments from creditors to mortgage broker companies in the calculation of points and fees, because such payments are already included in the rate established and offered by the creditor.
There is a definitional error which defines a mortgage broker as a loan originator that is not an employee of the creditor. This makes the mortgage broker company and its employee loan originators all mortgage brokers because neither is an employee of the creditor. It also is effective on a transactional basis because the same organization may be a creditor in another transaction. We are asking that any amount that is already reflected in the rate of a loan should not be included in the calculation of points and fees.
Lack of competition hurts consumers. NAMB is deeply concerned that without a correction to the definitional error in the Dodd-Frank Act there will be fewer and fewer mortgage broker companies in many areas, and a significant disparate impact will be felt by low- and moderate-income consumers who have no option but to obtain loans from large national banks. This is an unfortunate reality that is already affecting many consumers across the country and should not be allowed to get any worse. We respectfully urge this Subcommittee and Congress to take corrective action as soon as possible.
Since 2011, all compensation paid by creditors to mortgage broker companies is fixed, without any possibility for variation from transaction to transaction, as a result of the Loan Originator Compensation Rules issued by the Federal Reserve Board and the CFPB. This is a strong additional layer of consumer protection for borrowers utilizing a mortgage broker company and another reason why creditor compensation to a broker company should not be double-counted in the definition of points and fees. These parameters prohibit mortgage brokers from steering consumers to any specific loan or lender.
