A new mortgage rule scheduled for implementation in January should be delayed for a year to study the harm it might cause consumers and originators, according to an industry head.
Marc Savitt, president of the National Association of Independent Housing Professionals, said the Consumer Financial Protection Bureau’s qualified mortgage rule and unequal compensation disclosure standards posed a threat to mortgage brokers and should be delayed until further study was conducted.
“Even the CFPB has acknowledged that there will be a disparity to brokers, and there will be a detriment to the consumers,” Savitt said. “Everyone agrees that there’s going to be harm to small business and the consumer. There’ll be loss of originators, which means less competition. Less competition means harm to the consumer.”
The CFPB acknowledged in January in the Federal Register that in some cases when a qualified mortgage was originated, “the entire payment from creditor to broker would be captured in points and fees” in a wholesale transaction, while “the retail transaction might include no loan origination compensation at all in points and fees.” Such a situation, the CFPB admitted, “could constrict the supply of loan originators.”
Savitt said the NAIHP had written to CFPB head Richard Cordray to request a moratorium on the rules.
“What we’re asking them to do is delay the rule, and if they don’t want to delay the rule, at least delay a couple of parts of it – including the part about originator disclosure,” Savitt said. “And during that period of time, they need to conduct a study – because as far as we know, there’s been no study.”
The NAIHP is also pushing for equal compensation disclosure rules across the board. As it stands right now, brokers operate under more stringent disclosure rules than banks – a situation Savitt said could lead to consumers paying more than necessary for loans.
“Because of the way it’s disclosed, (borrowers) are going to be confused, and apparently even the CFPB agrees,” Savitt said. “They’re going to look at the broker and say, ‘Okay, you’re charging me two points but you’re giving me a credit for two points. Why don’t you just give me zero points like the bank?’ The consumer could end up getting a more expensive loan because of unequal disclosure. We have to arm the consumer to get the best deal possible deal on their mortgage, and we can’t do that if we have unequal disclosure.”