Associations Sue Fed on Compensation Plans

Claiming the Federal Reserve is turning a blind eye to unintended consequences from the implementation of new regulation on loan originator compensation, two industry trade associations have filed suit against the central bank. The National Association of Independent Housing Professionals sued the Fed for its final rule on loan originator compensation and yield spread premium disclosure under Regulation Z. The NAIHP states the rule will put brokers “at a significant and a permanent competitive disadvantage and will stifle competition in the lending industry to the detriment of consumers.” “The final rule is arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law, and in excess of statutory jurisdiction and authority,” according to the NAIHP lawsuit. The National Association of Mortgage Brokers also sued the Fed, seeking an injunction against the loan officer compensation rule. NAMB claims enforcement of the new rule “could cause devastating and irreparable harm to small business brokers, their loan officers and their entire staff.” The NAMB board wants the Fed to withdraw its final ruling and allow the Consumer Financial Protection Bureau “to perform its mandated responsibilities in this area.” Source: HousingWire

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