Savitt blasts Warren on mortgage speech

by Ryan Smith14 Jan 2014
The president of the National Association of Independent Housing Professionals had strong words for Sen. Elizabeth Warren Monday.

Last week, Warren gave a speech on the Senate Floor praising the Consumer Financial Protection Bureau’s new mortgage rules. During the speech, Warren said the CFPB – which she helped create – would prevent brokers from taking “under-the-table” payoffs from lenders.

“Before the crisis, some mortgage brokers who were supposed to be helping consumers find the best mortgage were actually taking money from lenders to steer those consumers into high-cost loans,” she said. “The CFPB’s new rules will prohibit this sort of under-the-table dealing and protect consumers from being tricked by people they think they can trust.”

That didn’t sit well with NAIHP President Marc Savitt, who announced his own congressional run last week.

“I’m very surprised that she doesn’t have a better grasp of this issue,” Savitt said. “Why would Elizabeth Warren, who is supposed to be knowledgeable on this issue, make that statement?

“That issue is a sore point – not only with me, but brokers across the country,” Savitt said. “Even if that was true, it would not have been resolved by the QM rule. In the opinion of the Federal Reserve Board and the CFPB, it was resolved in 2011 with the lender compensation rule.”
In that year, the Federal Reserve Board banned yield spread premiums, which had been paid to brokers for giving higher interest rates on loans in exchange for lower upfront costs. But Savitt pointed out that YSPs were always disclosed to the consumer, and that service release premiums – which are still charged by banks – amount to practically the same thing.

“They called yield spread premiums bribes, kickbacks, things like that. Brokers have been disclosing all their compensation, including yield spread premiums, since 1992. I don’t know many bribes that are disclosed,” Savitt said.

“The Federal Reserve Board in their loan originator compensation rule banned yield spread premiums because they said it was unfair and deceptive,” he added. “If they feel that way, why is it not equally unfair and deceptive for creditors who receive service release premiums have no disclosure requirement? … Everybody should be on a level playing field. Even the banks should have to go through the same process we do. Look at the record profits these banks are making. They don’t have the same restrictions we do, and the small businesses are getting hammered. And that hurts the consumer.”


Should CFPB have more supervision over credit agencies?