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A CALENDAR TOWARD TRAGEDY |
The following is a chronology of recent events regarding the proposed restrictive regulations on mortgage brokers with the National Association of Mortgage Brokers’ (NAMB) response. Even the most casual observer must pause and reflect the course of action or non-action taken.
Follow these 2008 events and connect the dots to your own conclusion.
April 8: Deadline for responses to Federal Reserve Board regarding an over 200 page proposal to alter Regulation Z in which mortgage brokers have to state on the GFE the exact amount of their YSP. This amount cannot change. NAMB responded with a 23-page discussion paper. NAMB needs to reveal a strategy for legal action to prevent HUD’s implementation of this proposal. (Exhibit 1)
April 30: Deadline for responses to FNMA, OFHEO and FHLM regarding their prohibition of mortgage brokers ability to order an appraisal. Brokers could not EVEN TALK to an appraiser. NAMB’s response is secret and not available for members or public viewing. NAMB quotes in trade journals threaten a lawsuit if FNMA continues on this path in New York State or as public policy on a national level. Dallas Ft. Worth Association of Mortgage Brokers (DFWAMB), as well as many of their membership, submitted an exception to this proposal (Exhibit 2).
April 1: Wells Fargo issues a new disclosure (Broker Fee Agreement) requiring all mortgage brokers and their borrowers to sign with submission of each loan. It reveals the method and the amount of YSP. It is very offensive and incriminating (Exhibit 3). DFWAMB writes NAMB President George Hanzimanolis, copying NAMB Executive Director Roy DeLoach (Exhibit 4), requesting the NAMB position. No written response was received from NAMB. DFWAMB sends correspondence to Wells Fargo Chairman Dick Kovacevish (Exhibit 5).
The letter DFWAMB receives from Wells Fargo regarding the Broker Fee Agreement states: “This disclosure…was previewed with several leaders of the National Association of Mortgage Brokers prior to its release. We believe, as do they, that it fairly represents brokers’ interests while fully informing borrowers of the costs associated with theirs transactions” (Exhibit 6). DFWAMB strongly opposes this Broker Fee Agreement and encourages others to send opposing correspondence to lenders. Additionally DFWAMB encourages withholding of loans to lenders who require the Broker Fee Agreement.
May 6: NAMB President George Hanzimanolis and immediate Past President Harry Dinham participate in a Tarrant County Association of Mortgage Brokers (TCAMB) Town Hall meeting in Arlington, Texas attended by approximately 70 professional members of the mortgage industry. The purpose of the meeting was an update on NAMB action taken regarding the above listed regulations and proposals. The NAMB president states that clandestine meetings were held with groups that did not wish to have their names revealed and that the NAMB response to Fannie Mae could not be shared at this time. Every question is met with an evasive answer. No one can understand if the NAMB president is out of the loop or just not wanting to share any information.
May 5 (the day before the Town Hall meeting): HUD receives Congressional correspondence signed by 149 Congresspersons requesting an extension of time to respond to the new proposed HUD rule (Exhibit 7). These Congresspersons responded to lobbying by a large group of industry trade organizations. There are seven Texas representatives signing this letter. Each organization should check the list for representatives from their state. Congresspersons represented should be contacted and thanked. These are our friends. Additionally, representatives whose signatures are missing should be contacted, educated and encouraged to join us.
May 7: HUD extends the response deadline to June 12. The list of organizations requesting the Congresspersons to extend the HUD deadline is offered for your review (Exhibit 8). NAMB is absent from the list. The obvious reason the NAMB president did not include this information at the May 5th Town Hall meeting is because HE EITHER DID NOT KNOW OR REFUSED TO SHARE THE INFORMATION. This is the same group of trade organizations that worked to withdraw the previous HUD proposal in March 2004. IT WOULD SEEM THAT NAMB IS NOT PART OF AN INDUSTRY COALITION. THAT PUTS US OUT HERE ALL ALONE…A VERY DANGEROUS PLACE TO BE. If the fate of mortgage brokers is in the hands of other segments of the mortgage industry, what will be the outcome for the mortgage broker?
SUMMARY: Some leaders of NAMB have stated they wish HUD would implement the proposed rule. Their reasoning is that implementation would be the basis for a lawsuit. However, the question is what happens to us during this period? Would we be able to conduct business or would we have to wait for the outcome of the lawsuit? These are critical times for mortgage brokers. The plan and process does not need to be secret.
The process for implementation of the HUD Rule is to publish the rule in the Federal Register. After thirty days of publication, the rule becomes law. Legal action needs to be filed during these 30 days to “stay” the implementation. NAMB states they have a law firm on retainer. However, they have not named the law firm.
DFWAMB hired one of the most prestigious law firms in Washington, D.C. to review the previous proposed rule; the firm of Covington and Burlington. This firm generated a White Paper critique. You are encouraged to examine it (Exhibit 9)*. It is interesting to note that NAMB, with $6,000,000 at its disposal, has not offered something to brokers that a small chapter in Dallas, Texas can offer to the entire mortgage broker industry. Testimonies before congressional hearings are fine but more is needed. More than, “send in your money and have faith, it’ll be OK.”
Three weeks ago, REALTORs(R) stormed the capital requesting the withdrawal of the HUD proposal. Are we left with REALTORs(R) to save our profession? We hope that a strong state association will offer additional leadership in confronting these issues. We all hang together or we all hang separately. Leadership needs to communicate to brokers the responses from these regulators, legislators and the legal process to defend the profession of the mortgage broker.
*The Washington D.C. law firm of Covington and Burlington’s critique can be viewed in its entirety by visiting www.DFWAMB.ORG .
We welcome and encourage comments. Please respond via phone, fax, or email.
Dallas Fort Worth Association of Mortgage Brokers
P.O. Box 803552, Dallas, Texas 75380
214-339-2629 phone 972-390-2097 fax
Please visit our web site: www.DFWAMB.ORG
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