Notes From The Mortgage Insider

This newsletter comes to you in two parts, one personal and the other business. I will be in the office for only a couple of hours today so that I can finish preparing for the Seder (Passover dinner) this evening and Tuesday evening. Although it is a tremendous amount of work, I am blessed to be able to host our family on both nights. That is what makes this my favorite time of the year; bringing family and friends together to celebrate the holiday. And so let me take this opportunity to wish each of you and your families a Happy Passover, a Happy Easter and a Happy Spring Break!

Now for some brief comments on current developments.

The injunction issued by the US Court of Appeals (DC) which stayed implementation of the Federal Reserve’s loan originator compensation rules was dissolved on Tuesday April 5, 2011 thereby putting the new rules immediately into effect. I guess the Federal Reserve is above the law after all.

In order to comply with the rule and the conflicting interpretations by our wholesale lenders we have had to completely change our business model. In the coming weeks I will provide you with more specific details on the changes, as well as some practical information on how the new rules impact you and your clients. For now I will direct you to two columns that appeared in the Real Estate section of the Washington Post on Saturday, April 16, 2011, both on Page E2.

Harvey S. Jacobs’ column is entitled “New broker compensation rules may not solve borrowers’ woes.” The discussion is very limited as is often the case due to newspaper space limitations, but I certainly agree with Mr. Jacobs’ largely negative characterization of two key parts of the new regulatory scheme. One is the rule that absolutely prohibits loan originators from giving any credits to the borrower in a lender-paid compensation transaction (“lender-paid” is the post-April 1 equivalent of what used to be called a “no-point” loan). Jacobs also was critical of the fact that the Fed exempted mortgage lenders (but not mortgage brokers) from many of the more restrictive rules.

The other column, by Kenneth Harney, “Why it’s good to be apprised of where appraisal fees go,” is about the huge mess that is otherwise known as today’s home appraisal industry. Although the new Fed rules do touch on home appraisals, the serious issues cited by Harney really began with the HVCC, or Home Valuation Code of Conduct, which was implemented in 2009. The column is mostly self-explanatory, but I will comment further in future newsletters.

Enjoy the holidays and (if you are lucky) your spring break.

Margie Hofberg, President, Residential Mortgage Center Inc

To contact Margie Hofberg email her at margie@rmcenter.com. If you wish to be notified when she posts her weekly Newsletter simply click on the Subscribe button below. To be added to her weekly Newsletter email distribution list email Renee Bourassa at renee@rmcenter.com.