NAMB’s Loan Officer Compensation Lawsuit Heard; Denied (update)

The U.S. District Court today denied NAIHP and NAMB’s motions for a temporary restraining order and preliminary injunction against the Federal Reserve’s loan officer compensation rule, to take effect on April 1. (See the Court’s decision.)

NAMB said in a post on its Facebook page this afternoon: “It’s not over yet: we are filing an appeal as we speak, the appeal should be heard very quickly. Video coming out soon.”

After a court hearing yesterday, NAMB said in a press release that it made “significant strides” in delaying the April 1 enforcement date set by the Federal Reserve Board’s loan officer compensation rule. “The rule prohibits mortgage brokers from paying their loan originators commissions from fees paid by the consumer, which could inflict harm to small business mortgage brokers, their loan officers and their entire staff if enacted,” according to NAMB.


The hearing took place just days before the scheduled rule implementation. NAMB and the National Association of Independent Housing Professionals (NAIHP) have received criticism over the timing of their suits against the Fed as they were filed within a month of the rule’s implementation.

“NAMB representatives were given the opportunity to present proof before Judge Howell and provide her with additional information to delay the FRB’s rule on LO compensation and grant an injunction,” said Mike Anderson, CRMS of Essential Mortgage, Government Affairs Committee Chair of NAMB.

“The Court had questions concerning the plaintiff’s position that Judge Howell wanted answered, and NAMB and its attorneys responded accordingly,” said Anderson. “NAMB requested that the Court render a decision and grant a temporary restraining order and a preliminary injunction prior to the April 1st implementation date.”

See NAMB’s press release on the hearing.

Written by Elizabeth Ecker

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  • N.B.: NAMB cannot appeal a denial of an interlocutory order, such as a TRO. They would have to have a ruling on the merits of the case and lose before an appeal could be filed. Approximate time to get to a result on the merits and an appear in Federal court, let’s start at one year – do I hear more?

  • We need a national association of loan originators to fight this kind of legislation. After all we are the ones getting the shaft and no one represents us.

  • The NMLS reports today that there are 119,000 licensed LO in the country at
    $100 a year dues would give us a $11,900,000 advertising and legal fund to fight any laws limiting our operations.

    • jimrevmort,

      There are over 450,000 real estate licensees in the state of California alone and almost one-third of that number are real estate brokers. To become a real estate broker in California requires not only passing an exam and background check but also passing pre-licensing education consisting of the equivalent of eight three-unit undergraduate courses in real estate. Even a salesperson needs three such courses.

      119,000 NMLS licensees is a joke. While the exam MIGHT be just as hard as the California real estate broker’s exam, it is incredible that any mortgage loan officers would be exempt from the NMLS exam. There is only 20 hours of national education required. Is it that the banks are worried that their mortgage loan officers are dumber than California real estate licensees or what? Their fear demeans their own employees.

      Some of the smartest mortgage originators I know in the mortgage industry are bank employees. So why exempt them? It is time for the banks to step back and realize not only what this exemption says to their own employees but also to the public at large.

  • It is becoming clear that the new tactic for change in any industry is to disparage the front line personnel and allow the public perception to fall on the negative. Then, change is sweeping as it is supported by public perception. Unfortunately,the perception is centered on false principals. Educators, Mortgage Originators, healthcare professionals, etc, have all been affected by this new and effective (diabolical) tactic. Sorry guys, but we aren’t built to play that way and that is why we are losing….

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