NAMB Applauds Consumer Protections in RESPA Reform Proposal
Mar 14, 2008
Washington, DC – March 14, 2008 – The National Association of Mortgage Brokers applauded the Department of Housing and Urban Development’s (HUD’s) success in addressing many outstanding consumer protection issues in its proposed reform of the Real Estate Settlement Procedures Act (RESPA) released for comment today.
“RESPA provides structure to a complex web of transactions, and this proposed rule represents a major step forward in terms of consumer protections,” said NAMB Executive Vice President, Roy DeLoach. “We commend Brian Montgomery, the Assistant Secretary for Housing-Federal Housing Commissioner, on this accomplishment.”
“While we are still examining and analyzing the proposal, we are encouraged to see that HUD is broadening its definition of a mortgage broker to include all those who broker mortgage loans, whether they work at a federal or state bank, lender, credit union, or mortgage broker,” DeLoach said.
NAMB has for years advocated for the equal treatment of all mortgage originators, and supports the decision by HUD to include all originators who broker loans in its definition of a mortgage broker.
This seminal decision is an acknowledgement that the “originate-to-distribute’ business model practiced by many correspondent lenders, small- and mid-size banks, lenders, and other entities, amounts to mortgage brokering, and requires the same disclosure as mortgage brokers. The “originate-to-distribute” business model calls for loans to be originated and then distributed to the secondary market as quickly as possible. This is how loans are securitized and sold to investors.
“This is a huge victory for consumers,” DeLoach said. “It will require everyone who brokers a loan to disclose their compensation in a uniform way, and that will allow consumers the ability to comparison shop when looking for a mortgage.”
NAMB is committed to working with HUD and other policy makers to formulate solid consumer protections pertaining to the mortgage industry and home ownership.
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