FEDERAL LEGISLATION
On Thursday 9/29/2005 RespaNews went on the Radio and conducted an open air discussion of “where are we on the RESPA rule”.
The question asked if NAMB would sue HUD if the their new GFE required mortgage brokers to continue to show yield spread premium and exempt the banking industry. The moderator directed the question to Joe Faulk, current Government Affairs chairman for NAMB. His answer was in line with the past ten years of stating we want to be friends with HUD and some other evasive platitudes about being cooperative and working with all parties. Instead of stating we have excluded the YSP on the proposed GFE by NAMB intentionally and we support HUD implementing that form and its essential elements. We prefer to have a friendly cooperative effort by HUD but the legal alternative is available and our members are supporting that effort. It must be remembered that the creation of the YSP on brokers was done in 1992 NOT to help the consumer but to be an impediment to mortgage brokers originating more loans.
This was a political favor given to special interest groups who in return would donate money and votes trying to re-elect a President. It was not a requirement for 18 years and suddenly was implemented without any public comment, being introduced in November 1992 in the Federal Register, only days preceding a national Presidential election. The disappointing fact is Joe Faulk was active in the Florida mortgage broker association and the newly formed NAMB. To continually come up short in public forums with a supporting verbal position with what your membership wants and the trade association has illustrated on the proposed form is disheartening to the membership.
The discussion created several comments and then Scott Stern of Lenders One, rattled on about how bankers don’t know what their profit is and then introduced the red herring regarding the fact that SRPs may be figured into the equation. The SRP (service release premium) has to do with the income stream of the loan, principal and interest, the YSP has to do with the amount of premium the loan has in the market the day it is locked to the borrower. It appeared neither of these gentlemen had an understanding of these facts so what kind of remarks do you think were generated?
It appears that the packaging concept is dead. There have been 360 participant organizations in the seven roundtables and 95% are completely opposed to the packaging proposal. It would be a waste of taxpayer money for HUD to spend any time on that proposal.
The GFE is another matter. It can be improved and more accurately mirrors the one from HUD. NAMB has proposed an excellent document that is fair to the consumer and the industry. It does not include the YSP and the mortgage industry should stand firm to HUD regarding that position.
The MBA has proposed a GFE which is similar to the NAMB form and of course is missing the YSP. The font size is very small and we are attempting to create a copy that is more legible.
SUMMARY - No package most likely. A new GFE sometime in the future. NAMB is still spineless on supporting the elimination of YSP.
Let’s hear from you and comments on the new proposed GFEs.
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