Parameter name: request
Translate Request has too much data
Parameter name: request
Just in case you've missed any of these developments or just needed a refresher, here is the latest on originator compensation reform.
On Friday, April 1st, the US Court of Appeals granted a stay on Fed's LO Compensation rule. This delayed the implementation of the rule until the Court was given time to hear additional responses from the Fed and NAMB/NAIHP. Here is an excerpt from the court order:
"Upon consideration of the emergency motion for expedited relief and the emergency motion to stay implementation of final rule pending appeal, it is ORDERED that the implementation of the rule under review in these consolidated cases, 12 C.F.R. § 226.36(a), (d), and (e), be stayed pending further order of the court. The purpose of this administrative stay is to give the court sufficient opportunity to consider the merits of the motions for emergency relief and should not be construed in any way as a ruling on the merits of those motions. See D.C. Circuit Handbook of Practice and Internal Procedures 32 (2010). It is FURTHER ORDERED, on the court’s own motion, that the government file a combined response to both motions by 12:00 noon, Monday, April 4, 2011, not to exceed 20 pages. Appellants may file a joint reply to the government’s response by 10:00 a.m., Tuesday, April 5, 2011, not to exceed 10 pages. The parties are directed to hand-deliver the paper copies of their submissions to the court by the time and date due."
The Fed offered their response on April 4th. Here are a few excerpts from the Fed's appeal...
"The Board promulgated the Rule under authority granted in section 129(l)(2) of TILA, 15 U.S.C. § 1639(l)(2), to “prohibit acts or practices in connection with mortgage loans that the Board finds to be unfair, deceptive, or designed to evade the provisions” of section 1639. 75 Fed. Reg. at 58513. Appellants err in arguing that section 1639(l)(2) does not authorize the Rule. Their claims that the subsection relates only to high-cost loans defined in 15 U.S.C. § 1602(aa), and permits regulation only of “creditors” and only by disclosures, not substantive limitations, are inconsistent with both the plain statutory language and with the Board’s interpretation of TILA.
Section 1639 was added to TILA as part of the Home Ownership and Equity Protection Act of 1994, Pub. L. 90-321, 108 Stat. 2191 (“HOEPA”).In addition to authorizing the Board to prohibit unfair or deceptive practices in connection with mortgage transactions, section 1639 required special disclosures and limitations on the terms of certain high-cost mortgage loans. The statutory provision is carefully drafted: in each of the substantive provisions requiring specific disclosures or prohibiting substantive terms, the statute refers explicitly to “a mortgage referred to in section 1602(aa) of this title [defining high-cost loans].” See 15 U.S.C. § 1639(a), (c)-(i). Subsection 1639(l)(2) is distinctly different. It authorizes the Board to prohibit, by regulation or order, “acts or practices in connection with – (A) mortgage loans that the Board finds to be unfair [or] deceptive ….” Nothing in the language of the subsection refers to “a mortgage referred to in section 1602(aa)” or limits the Board’s authority to creditors or to disclosure. The general purposes or structure of TILA or HOEPA as a whole cannot override the express exclusion in subsection 1639(l)(2) of the limits appellants seek to impose. Thus, there is no reason even to go to the second step of the Chevron analysis because the “the intent of Congress is clear, [so] that is the end of the matter.” Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984).4 Moreover, to whatever extent the language of section 1639(l)(2) could be said to be ambiguous, the Board’s interpretation, as expressed in the preamble to the Rule, 75 Fed. Reg. at 58513, is entitled to reference from this Court. Ford Motor Credit v. Milhollin, 444 U.S. 555, 565 (1980) (“deference is especially appropriate in the process of interpreting the Truth in Lending Act …. Unless demonstrably irrational, Federal Reserve Board staff opinions construing the Act or Regulation should be dispositive”). Appellants thus have failed to show a likelihood of success on this argument.
AND....
"A plaintiff must show that his injury is “certain, great and actual” – not “theoretical” – and “of such imminence that there is a ‘clear and present need’” for extraordinary equitable relief to prevent harm." ....... "It must be noted at the outset that appellant NAIHP failed, in the district court, to show irreparable harm stemming from the Rule as a whole."
AND...
"It is certainly the case that the public interest favors allowing the Rule to take effect to put a stop to practices that the Board has found to be “unfair.” As the Board found, the current system causes “consumers [to] suffer substantial injury by incurring greater costs for mortgage credit than they would otherwise be required to pay.” 75 Fed. Reg. at 58515. Each day that the Rule’s effective date is postponed is another day consumers will suffer this harm, and their injury, too, is irreparable."
NAMB/NAIHP filed their response to the Fed's appeal today. Here are a few excerpts....
The Board Lacks Requisite Authority Under HOEPA: The Board claims that reference to ancillary rulemaking authority contained at the end of Section 151 subsection (d) (creating Section 129, 15 U.S.C. § 1639) contains no limit on the Board.s authority to constrain any ..acts or practices in connection with . (A) mortgage loans that the Board finds to be unfair [or] deceptive... Board Br. at 7-8. In attempting to manufacture this rulemaking authority, the Board asks this Court to ignore general purpose and structure of HOEPA and TILA and to reach an interpretation that would grant the Board nearly limitless authority to regulate the entire real estate industry, both creditors and non-creditors, as well as any aspect of any industry where a federally-related mortgage loan is involved
AND...
The Board supported its rule by stating that .ield spread premiums present a significant risk of economic injury to consumers.. 75 Fed. Reg. at 58,515. However, as the Board itself stated, the creditor generally controls the yield spread premium funds.. Board's Br. at 6 (emphasis added). As NAIHP's motion already explained (at 9-13), the Board'ss decision to regulate mortgage brokers, while effectively exempting creditors that control 90% of the mortgage origination market was arbitrary and capricious. The district court and the Board also concede that NAIHP and NAMB members provide consumers with disclosures that make clear that they are independent contractors, are not the consumers agents, and .cannot guarantee the lowest price or best terms available in the market.
AND...
The Board Failed To Meaningfully Conduct the Regulatory Flexibility Act Analysis: With respect to the Section of the Rule challenged by NAMB, the Board cannot escape its responsibilities under the RFA by referring to the Challenged Section of the Rule as an .insignificant consequence. and the Board.s failure to meaningfully examine the effect, as well as any alternatives to the Challenged Section of the Rule is fatal to the Board.s claim that they complied with the RFA. Board Br. at 16. The Board's insignificant consequence characterization is contradicted by the real, catastrophic, and irreparable harm that the Challenged Section of the Rule has been found to cause NAMB.s members, as well as the Board's own admission which acknowledges that entirely new business models would result.
With both the Fed's appeal and NAMB/NAIHP's response in the hands of the Court, we are now stuck in a waiting game. The Court has five days to announce new orders, until then, originator compensation reform is still delayed. Here are the latest updates from NAMB...
April 5, 2011 5:55pm
April 5, 2011 3:38pm
April 5, 2011 12:06pm
It is MND's opinion that originator compensation reform should be
delayed at least until the Consumer Financial Protection Bureau is fully
up and running in July.From Originator Compensation: Putting the Cart Before the Horse:
"By limiting the consumer's choice of originator compensation methods
to either rebate through a premium note rate or paying points to buydown
the note rate, we are also limiting their "best execution" financing
options. This would imply, based on the segmented nature of the mortgage
market, that some consumers might end up paying more than they would
have for the same note rate before these regs were implemented (no
lender prices the same as another). Then again, the final rules clearly
prohibit a mortgage broker or loan officer from “steering” a consumer to
a lender offering less favorable terms in order to increase the
broker’s or loan officer’s compensation. Yikes. I'm not sure how that
rule will be monitored or enforced from the perspective of the
consumer's most efficient buydown structure. If there is no rebate
standard/originator commission standard, then how do we regulate the
industry? I believe we need a better definition of what constitutes
steering a consumer away from an expensive buydown (good) vs. steering a
consumer toward a higher rate just to increase commission (bad)"
UPDATED AT 6:20PM: L.O. COMPENSATION DELAY DISSOLVED
BAD NEWS: THE DELAY HAS BEEN LIFTED. ORIGINATOR COMPENSATION RULES ARE IN EFFECT. From the Court Order: "Upon consideration of the emergency motion for expedited relief and the emergency motion to stay implementation of final rule pending appeal, the response thereto, and the reply, it is ORDERED that the administrative stay entered on March 31, 2011, be dissolved. It is FURTHER ORDERED that the motions be denied. Appellants have not satisfied the stringent standards required for a stay pending appeal. See Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977); D.C. Circuit Handbook of Practice and Internal Procedures 32 (2010)."
No hay comentarios:
Publicar un comentario