The National Association of Mortgage Brokers (NAMB) announced today it has filed a lawsuit in U.S. District Court against the Federal Reserve, seeking 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. “This section of the Federal Reserve Board’s Rule, as presently drafted, could cause devastating and irreparable harm to small business mortgage brokers, their loan officers and their entire staff as of the rule’s April 1, 2011 implementation date.”
Further, NAMB says the Fed has “turned a blind eye to the unintended consequences of the rule and to the resulting limiting of the credit opportunities available to consumers,” despite requests from several trade associations including the U.S. Small Business Administration Office of Advocacy.
The NAMB lawsuit comes following a similar suit filed by The National Association of Independent Housing Professionals (NAIHP) on Monday.
NAMB announced via YouTube in February that it intended to take action against the rule.
Mortgage professionals have been gearing up for the change, amidst remaining uncertainty about the rule.
Written by Elizabeth Ecker