Dear Mortgage Broker: All the marketing in the world won’t help you . . .

JC Kadii, Mortgage Virtual Assistant .

All of the marketing in the world won’t
help you if the Federal Reserve Board makes these
changes to Regulation Z.

Under the proposed rules, it appears that the
broker would have to disclose their entire
compensation to the borrower, including YSP,
before taking an application.
Brokers would have to disclose the
specific dollar
amount of the compensation.

The last day to submit comments is Monday,
April 7, 2008. Unlike most
rulings, this
one does not require a Congressional vote.
The Federal Reserve Board can pass these
changes into law.

The Federal Reserve Board’s goal in making
these changes to Regulation Z, according to their
own press release, is “to protect
consumers from unfair or deceptive home
mortgage lending and advertising practices.”

These changes will require mortgage
brokers, and only mortgage brokers, to
submit additional disclosures.

I am perplexed. If these rules truly
“protect
the consumer,” wouldn’t it make sense to
impose
them straight across the board, so that
everyone offering mortgages would have
to follow the same rules?

How will the
consumer be able to choose the best mortgage
loan if they don’t have all of the information?

Since most originators (whether
employed by a lender, bank or broker) can
make back-end income, wouldn’t it be fairer
to have everyone disclose their YSP?

To send a comment to the Federal Reserve
Board:

• Here are some suggestions
  of points to include in your letter.

• Scroll to the bottom of this
  page on the FRB’s site. You can also
  read other people’s comments.

• Email your comments to regs.comment@federalreserve.gov
  with Docket No. R-1305 in the subject
  line.

For additional information:

• This
  letter, sent by the National Association
  of Mortgage Brokers to the Small Business
  Administration
  gives a point-by-point analysis of the ways
  in which this proposed change affects mortgage
  brokers. http://snipurl.com/namb_sba

• These two comment letters not only explain
  some of the features of the rule in plain
  English,
  they also offer points you can use when you
  send your comments to the Federal Reserve Board.
  They come from the North Carolina Association
  of Mortgage Professionals’ website.
  
  

  http://snipurl.com/regz_ltr1

  http://snipurl.com/regz_ltr2

And lastly, thanks to Eleanor Thorne for bringing this issue to my attention through this post in her blog. A second thanks goes out to D. Bass, Underwriter and Mortgage Trainer, who read this article in my email newsletter and encouraged me to post the information on this blog.

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JC Kadii, Mortgage Virtual Assistant . Through http://www.close-more-loans.com/, JC leads a team providing top notch administrative, internet marketing, and technology services to mortgage professionals. Mortgage professionals are encouraged to visit the website and sign up for the More Closings email newsletter to receive the report 6 Steps to More Referrals.