NAMB faces questions over alleged forged senator’s letter

The former Senate Banking Committee chairman's letter asks for changes to the QM rule. There's only one problem: it seems to be a fake.

An apparently fraudulent letter is causing friction between two industry groups.

The letter purports to be from former Sen. Tim Johnson (D-S.D.) to Richard Cordray, director of the CFPB. Dated Dec. 21, 2014 – before Johnson left office – the letter regards a possible “definitional error” in the Wall Street Reform and Consumer Protection Act of 2009. The letter states that Congress did not intend to count compensation paid by creditors to mortgage brokerage firms toward the 3% points and fees cap for qualified mortgages.

National Mortgage News published a story on the letter on Jan. 16. The story stated that the letter had been provided to the publication by the National Association of Mortgage Brokers.

“I’m doing handstands when I read this thing,” said Marc Savitt, president of the National Association of Independent Housing Professionals. “This is great. I mean, maybe he took two years too long to say this thing, but I’m not going to look a gift horse in the mouth.”

As the chairman of the Senate Banking, Housing and Urban Affairs Committee, Johnson swung real weight, and his opinion might convince the CFPB to modify the compensation rules, Savitt said.

There was only one problem: the letter was apparently a fake.

“I wanted to get a copy of the letter, so I wrote to a couple of my Senate contacts. They came back and said, ‘There’s a problem with this letter, Marc. We don’t believe the letter was ever sent.’”

And more problems kept popping up. In a Feb. 9 email to Savitt, CFPB assistant director Dan Smith wrote that the agency had never received the letter, and that former Senator Johnson told the agency “that he did not authorize such a letter and that the letter did not represent his views.”

“(It) appears that the letter is not factually correct or authorized by the senator,” Smith wrote. The CFPB also confirmed that it had not received the letter in response to an inquiry from MPA.

Savitt then reached out to Drey Samuelson, Johnson’s longtime chief of staff. “I can confirm that the letter in question was neither authorized, signed, or sent by Senator Johnson,” Samuelson wrote on Feb. 12. Samuelson also responded to an MPA inquiry, confirming again that the letter was not written or authorized by Johnson.

In fact, the letter seems to have been written by a phantom. No one seems to have seen it before NAMB sent it to National Mortgage News.

Savitt contacted NAMB president John Councilman and asked where the association got the letter, but got nowhere.

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“Unfortunately, who wrote or originated the letter is unknown to NAMB,” Councilman wrote in a Feb. 17 letter to Savitt. “The letter fell into our possession, as things sometimes do in D.C., and we thought it was interesting since it points out how consumers are affected by current regulations.”

Savitt, citing a Feb. 12 email from NAMB CEO Don Frommeyer, expressed skepticism.

“John, I have an email from Don which states, ‘he confronted the source,’” Savitt wrote to Councilman on Feb. 17. “Therefore, you know exactly where the letter came from. Please don’t try and B.S. me!”

Savitt told MPA he has good reason for wanting to know the source of the letter.

“I think it’s important – it’s vital – that NAMB disclose the name of the source from which they received that letter,” he said. “The perception on Capitol Hill is that the letter was written and sent to the media by a mortgage broker.”

And that, he said, is the last thing brokers need in an environment where they’re already looked at with suspicion.

“Don Frommeyer has assured me that it’s not a mortgage broker, and I believe him,” Savitt said. “I think it’s important that we show the people up on Capitol Hill that mortgage brokers are ethical, honest small business owners. By releasing the source of the letter, NAMB will show that mortgage brokers were not involved.”

As of this writing, neither Councilman or Frommeyer have responded to requests for comment.

 To read the letter, click here.

To compare Johnson's official signature to the one in the letter, click here.