Some mortgage brokers were happy Friday that a law suit against a Federal Reserve rule, scheduled to take effect that day, had been stayed 5 days. I wasn’t. The rule controlled how to price mortgages. Here’s what I posted on a major mortgage broker discussion site (It got noticed):
This stay is terrible news for our industry because it further delays necessary clean up. I agree the new compensation rule itself is counterproductive and redundant.
But that’s not our biggest problem. The first problem is that exploitive and greedy hiring practices caused the need for government intervention. Too many broker companies treat employed LOs [Loan Originators] like crap: no training, no decent pay schedule. This exploitation in turn pressured LOs into decisions that were not in the interest of homeowners.
Second, our industry representation is ineffective and even embarrassing. Suing is the tactic of those who do not understand how the system works and cannot produce effective compromise. Industry leaders have responded like children who have lost a candy bar. They go to Washington, DC and are not professional enough to wear a suit and tie. They don’t even realize they are announcing to the world they are untutored rubes. Then we hear nutty over-statements like “we have the best lawyers in the country.” It wasn’t until about the last month they realized that complaining about their jobs is bad politics. So – too late – they began to contend the new compensation rule was bad for homeowners but never really made a compelling argument.
Today’s result: confusion. You know what, the rule is bad. But it’s not that tough to figure out. “Oh my God! How can an industry survive if you have to pay branch managers a salary?” Complaining about how the rule hurts your business makes you seem greedy and self centered. Look around. Who agrees with industry groups? Who is with us? Nobody!
After five losing seasons, you fire the coach. The current professional organizations and the people running them need to step aside and make way for educated professionals who can work with regulators, build coalitions, and explain what we are doing for homeowners.
License # 114972
- US mortgage brokers fail in bid to stop Fed rule (reuters.com)
- New Mortgage Rules Change the Game For Brokers, Consumers (mint.com)
- 6 consequences of the Federal Reserve’s rule on loan officer compensation (saltlakecitymortgage.wordpress.com)
- Mortgage Brokers Win Bid to Block Federal Reserve Loan Fees Rule (businessweek.com)
- Mortgage Broker Reform Could Limit Consumer Options (dailyfinance.com)
- The Saga Continues! (themortgageruler.wordpress.com)
- Loan Originators Who Argue That Predatory Lending was Bad Should Welcome the New FRB Rule on LO Compensation Prohibitions (raincityguide.com)
- Changes to the mortgage market beginning today (April 1, 2011) (hsh.com)
- Mortgage Brokers Sue the Fed Over Ban on Commissions (legaltimes.typepad.com)