FAMB Government Affairs Update
March 30, 2006

 

Sixty Florida Mortgage Brokers Descend Upon Washington DC

 

Sixty Florida Mortgage Brokers joined forces in Washington DC this week to make coordinated presentations of Mortgage Brokers positions on Legislation and Regulation to Members of Congress representing districts across Florida.

Please remember to make your personal contribution to FAMB’s Federal Political Action Committee to help fund the continuation of these important efforts.

 

Representative Spencer Bachus Plans Anti-Predatory Lending Bill

Rep. Spencer Bachus, R-Ala., is expected to propose an anti-predatory lending bill that looks much like a North Carolina law, reports said.

Bachus, chairman of the House Financial Institutions Subcommittee, said that a bipartisan group of lawmakers is working with consumer and industry groups to write a bill similar to the North Carolina statute. “If a consensus can be reached, a mark-up will be held,” he stated.

Two bills on this subject were offered last year. The measures, now in the full House Financial Services Committee, were introduced by Reps. Paul Kanjorski, D-Pa., and Bob Ney, R-Ohio; and Reps. Brad Miller, D-N.C., Melvin Watt, D-N.C., and Barney Frank, D-Mass.

Federal Trade Commission to Host Workshop on Alternative Mortgages on May 24

Workshops such as this are often the introduction of legislation or regulation legislators and mortgage regulators have already planned.

On May 24, the Federal Trade Commission will host a workshop, Protecting Consumers in the New Mortgage Marketplace, on consumer protection issues arising from the growth of “nontraditional” or “alternative” mortgage products in the residential mortgage marketplace.

As housing prices have soared in recent years, alternative mortgage products, such as “interest-only” loans and payment option adjustable rate mortgage (ARM) loans (or “pick-a-payment” loans), have grown increasingly prevalent. These types of loans were less than one percent of mortgages in 2000, yet they comprised up to half of new loans last year.

These mortgage products may provide benefits for many consumers but, at the same time, they may present unexpected risks for consumers. Therefore, such loans may be particularly risky under changing market conditions.

The workshop will explore various aspects of the home mortgage marketplace, including how these mortgage products have evolved, the benefits and risks they pose for consumers, how market forces shape the prevalence of particular mortgage products, and consumer understanding of the terms, features, risks, and benefits of these loans.

The FTC staff will identify and invite individuals with relevant expertise to participate as
panelists. The FTC staff also may invite self-nominees to be workshop panelists. Those interested in participating as panelists must notify the FTC in writing on or before April 12. For details on where and how to submit requests to participate as a panelist, visit: www.ftc.gov/bcp/workshops/mortgage/index.html.

The Federal Reserve Board Seeks Public Comment on Issues Related to the Accuracy of Consumer Credit Reports and the Reinvestigation of Disputes

Mortgage Brokers work with and are knowledgeable about how consumer credit reporting can be improved.  A Request for comments on Consumer Credit Reporting was issued by the Federal Reserve Board and other Federal Agencies as a step toward satisfying sections of the Fair and Accurate Credit Transactions Act.

Comments are due May 22 on an advance notice of proposed rulemaking on how to ensure the accuracy of consumer credit reports and implement procedures for reinvestigations of disputed information.

If you have ideas on how to improve consumer credit reporting, tell the Federal Reserve Board about them.

Some requirements for ensuring report accuracy and on error resolutions were already in place under the Fair Credit Reporting Act, and the FACT Act revises those by providing for guidelines and implementation policies.

Eighteen specific issues are suggested for comment. The notice also seeks input specifically from:

·         Small institutions;

·         Non-depository institutions such as Mortgage Brokers;

·         Consumer reporting agencies other than the credit bureaus (such as those dealing with insurance, employment or tenant screening or check verification); and

·         Individuals, public interest groups and consumer advocacy organizations.

The Request for comment was published in The Federal Register and you can find more information about this request for comment at the Federal Reserve’s web page. (FederalReserve.GOV)

Other Legislative and Regulatory Issues

 

These issues include: RESPA Reform, Fannie Mae and Freddie Mac Reform, Small Business Health Plans, Predatory Lending Legislation, The Home Mortgage Disclosure Act, Mortgage Broker Compensation, Affiliated Business Arrangements and Fair Labor Standards.

1.   RESPA Reform Proposals from HUD –

·         Since the conclusion of HUD’s RESPA Reform Roundtables held this summer, there has been no definitive word from HUD on the timing or content of their HUD RESPA Reform proposals.

• Comment from HUD to FAMB …“Since the roundtables, HUD has received numerous comments from various representatives of the industry.  Before proceeding with a final rule, you can be assured that interested parties will have ample opportunity to provide the Department with additional comments.”

2.       Reform of Fannie Mae and Freddie Mac, also known as GSE Reform – H.R. 1461 and S. 190 Legislation may limit access by Mortgage Brokers to Fannie Mae and Freddie Mac automated underwriting systems.  Mortgage Brokers rely on these systems to quickly assess a mortgage application and provide consumers with mortgage credit.

3.       Small Business Health Plans – (S. 1955 and H.R. 525) - The Small Business Health Fairness Act and The Health Insurance Marketplace Modernization and Affordability Act of 2005 are Federal Legislation that has passed the U.S. House of Representatives and is awaiting action in the U.S. Senate.  This legislation will allow small businesses and the self-employed to obtain group insurance through their trade associations.  If passed, this legislation will give Mortgage Brokers and other small businesses access to another source for Health Insurance.

 

·         Florida Senator Martinez supports The Health Insurance Marketplace Modernization and Affordability Act of 2005.

·         Florida Senator Nelson seems opposed to The Health Insurance Marketplace Modernization and Affordability Act of 2005.

·         Small Business Health Plan legislation made progressive movement in the Senate on March 15 when the Health, Education, Labor and Pension (HELP) Committee passed The Health Insurance Marketplace Modernization and Affordability Act of 2005 (S. 1955) by a vote of 11-9. The legislation is sponsored by Chairman Michael Enzi (R- WY).

The Health Insurance Marketplace Modernization and Affordability Act of 2005 (S. 1955) is stalled in the U.S. Senate.  Contact your U.S. Senators and ask them to vote on The Health Insurance Marketplace Modernization and Affordability Act of 2005" (S. 1955)

 

4.       Responsible Lending Act – (H.R. 1295) This legislation was introduced by Reps., Bob Ney, R- Ohio, and Paul Kanjorski, D-Pa., to protect consumers against predatory lending practices through revisions to federal statutes affecting lenders, brokers and appraisers.

This legislation includes provisions that will increase the number of loans considered as section 32 (High-Cost Loans) and provides for a Federal Registry for Mortgage Brokers.  That’s right, not all mortgage originators, Just Mortgage Brokers.

·         Rep. Spencer Bachus, R-Ala., is expected to propose an anti-predatory lending bill that looks much like a North Carolina law, reports said.  Bachus, chairman of the House Financial Institutions Subcommittee, said that a bipartisan group of lawmakers is working with consumer and industry groups to write a bill similar to the North Carolina statute. “If a consensus can be reached, a mark-up will be held,” he stated.

5.       Home Mortgage Disclosure Act

In a speech before the Consumer Bankers Association 2005 Fair Lending Conference, FED Governor Mark Olson made the following statements as his conclusion.  He promoted the importance of competition in free and open markets to help reduce consumers’ loan costs.

“It is also important to maintain perspective. The inherent limitation of the HMDA data collection must be understood if it is to promote market efficiency and legal compliance. It is not intended to discourage lenders from entering or remaining in higher risk segments of the market. Ultimately, the cost of credit to higher-risk borrowers is lower when there is a competitive marketplace.”

6.       State Attorney Generals Say  Mortgage Brokers’ Receiving Extra Compensation for Originating Mortgages That Carry a Higher Note Rate or Extra Fees is a Concern  

Iowa Attorney General Tom Miller is vowing that the states might next tackle the origination practices of loan brokers.

Speaking during a recent news conference, Mr. Miller said Mortgage Broker practices are something we will look at in the future.  During the news conference, the participating AGs singled out the compensation practice where the Mortgage Broker receives extra compensation for originating mortgages that carry either a higher note rate or extra fees.  The term used by the Attorney Generals to describe this action is “Up-Selling”

7.       Affiliated Business Arrangements, ABAs and One Stop Shops – This issue involves the legality of homebuilders requiring or inducing homebuyers to use mortgage companies affiliated with the builder.

8.       The U.S. Department of Labor Administers the Fair Labor Standards Act – and its affect on compensation to commissioned mortgage employees.