• Prohibiting certain payments to a mortgage broker or a loan officer that are based on the loan's terms and conditions.
• Prohibiting a mortgage broker or loan officer from "steering" consumers to transactions that are not in their interest in order to increase the mortgage broker's or loan officer's compensation.

Here is what the Federal Reserve says about yield spread premiums:
 
"Yield spread premiums can create financial incentives to steer consumers to riskier loans for which loan originators will receive greater compensation. Consumers generally are not aware of loan originators' conflict of interest and cannot reasonably protect themselves against it.

Yield spread premiums may provide some benefit to consumers because consumers do not have to pay loan originators' compensation in cash or through financing. However, the Board believes that this benefit may be outweighed by costs to consumers, such as when consumers pay a higher interest rate or obtain a loan with terms the consumer may not otherwise have chosen, such as a prepayment penalty or an adjustable rate. "

H.R. 3126, the Consumer Finance Protection Agency Act of 2009 - New Agency Could Effectively Eliminate the Mortgage Broker Origination Channel

U.S. House Financial Services Chairman Barney Frank, D-Mass., said this week that the forthcoming regulation reform bill may include a cramdown provision giving bankruptcy judges the authority to modify mortgage loan terms.
 
Contact your federal representative today and ask them to vote to consider changes when considering H.R. 3126!
 
The Administration has proposed a Consumer Finance Protection Agency (CFPA), which targets mortgage brokers with regulations that will effectively eliminate this mortgage origination channel for consumers, limiting competition, increasing prices, and reducing service.  Consumers will be forced to obtain mortgages directly from banks, which are not currently equally bound by disclosure requirements about compensation and fees.
 
H.R. 3126 has been introduced in the House of Representatives to create the new CFPA. While the legislative language does not specifically reference mortgage brokers, the broad authorities H.R. 3126 provides to the new agency could severely harm the mortgage broker origination channel if the Administration moves forward with its plans outlined in its White Paper.