Fed Consolidates Loan Officer Compensation Lawsuits

Following two lawsuits this week filed by the National Association of Independent Housing Professionals (NAIHP) and the National Association of Mortgage Brokers (NAMB) against the Federal Reserve Board, the agency filed a motion to consolidate the lawsuits, which target its loan officer compensation rule.

On Thursday, NAMB filed suit, on the heels of NAHIP’s suit, which was filed Monday.

NAIHP President Marc Savitt said the Fed’s decision to consolidate the lawsuits was predictable. “NAIHP has always believed a united front would enable our industry to prevail in this matter. We look forward to working with NAMB, to achieve success for consumers and the mortgage/housing industry,” NAIHP said in a statement.

Advertisement

The suits seek to restrain the implementation of a specific section of the Fed’s loan originator compensation rule, slated to go into effect on April 1.

“This section, if implemented, would prohibit mortgage brokers from paying their loan officers commissions based on fees paid by the consumer,” NAMB stated. According to NAIHP, the rule “eliminates competition, which increases costs for consumers and creates more business failures for small business.”

There has been confusion surrounding the rule for several months leading up to its scheduled implementation.

Written by Elizabeth Ecker

Join the Conversation (1)

see all

This is a professional community. Please use discretion when posting a comment.

  • The headline is somewhat misleading. Until a court consolidates cases, there is no consolidation. The Fed cannot unilaterally consolidate federal cases without court consent.

    The main problem with a “united front” is that many times plaintiffs have different agendas with different priorities. For example, the brokers may be satisfied if the compensation restrictions were removed for brokers while the other organization will only settle if the rule is revoked. One could have a much stronger case than the other. The main benefit to all parties is lower legal fees.

    It is up to the court to determine if consolidation will materially impact the party which seems reluctant to combine cases. Many attorneys believe that cases are won or lost in pretrial motion rulings lik this. A positive consolidation ruling could go against NAMB and could doom total or partial revocation of the rule even before the case is heard.

string(96) "https://reversemortgagedaily.com/2011/03/11/fed-consolidates-loan-officer-compensation-lawsuits/"

Share your opinion