Who’s behind the Fed’s Rule on Originator Compensation?

Fed Call to Action

Although, this is a complicated matter that involves many, we do know the main individual, who is the driving force behind the compensation rule.

Paul Mondor:

Mondor is Senior Attorney for the Fed’s Division of Consumer and Community Affairs. He played a key role in the rule’s drafting and is the Fed’s point man. NAIHP and IMMAAG, along with other trade associations, have continually explained the unintended consequences of this unnecessary rule and the harm it will create for consumers, industry and the states. In spite of this, Mondor and the Fed refuse to withdraw, or even delay the rule.

Objective:  The compensation rule goes well beyond the Board’s authority. Our goal is to convince the Board the rule should be withdrawn on that basis and because they failed to demonstrate even a remote correlation between a mortgage loan originator’s compensation and abusive, deceptive or unfair practices. Should our efforts prove to be unsuccessful, we can either continue to work with Congress and the SBA Office of Advocacy, or take the appropriate legal action./p>

Here’s the plan:

Starting Monday, January 31, 2011, we want you to personally tell Mr. Mondor how this rule will affect your business, livelihood and family. In order for this action to be effective, you MUST continue your emails and calls every day, until the Fed either withdraws or delays the rule. Everyone in your office needs to participate. NAIHP will notify you of any changes in the Fed’s position.

Email: Mondor’s email address is paul.mondor@frb.gov This e-mail address is being protected from spambots. You need JavaScript enabled to view it   

Phone: 202-452-3667. Ask for Paul Mondor. Whether he answers the phone, or you get voicemail, leave the same message as in your email.

Below you will find specific language in blue, which you can copy and paste in your email, or use as talking points when making your calls. Feel free to use your own words, but remember to be professional and respectful.

Please Note: The Fed has been known to block certain wording in email subject lines. Therefore, you may want to change the subject line wording, when repeating this process.

I am a licensed (NMLS#__________), mortgage loan originator. The FRB’s finalized rule on originator compensation will prevent me from competing in the free market and as you have already acknowledged, cause a significant economic impact on small entities, such as mine.

I am requesting the FRB withdraw this rule, or at the very least delay it for the following reasons:

• The FRB failed to provide any evidence (other than anecdotal), establishing a need for this rule.  Where is the evidence (case law), that originator compensation is unfair, deceptive, or abusive? In addition, the FRB failed to comply with the RFA. Although, you finally provided a “compliance guide,” after a deficiency notice from the SBA, your submission fell far short of meeting the requirements.
• Consumer costs will rise sharply, due to the loss of tens of thousands of originators and the competition they provide.
• This unnecessary and unlawful intervention into our industry will cause me to go out of business. I will be unable to pay my office expenses, including payroll and taxes. With unemployment over 9%, how will I obtain employment to pay for my mortgage, car payment, children’s education and the basic necessities?
• The significant economic impact created by this rule, will reach far beyond small entities. The massive unemployment, foreclosures and bankruptcies, will also greatly affect the revenues of federal, state and local governments.
• When the financial crisis was exposed, the mortgage industry responded on its own, making major changes in products, requirements and most importantly, underwriting. In addition, as a state –licensed originator under NMLS, unlike my bank-employed counterparts, I was required to comply with the difficult, expensive and stressful process of the SAFE Act. Now that I’ve proven my education and background and industry has responded with its own changes, the Board feels justified to impact my compensation in ways that will drive me out of the industry and harm my customers.
• The FRB exempts “creditors” from this rule, as they provide their own funding at settlement. Despite the fact brokers, originators and creditors all originate, process and close loans in the same manner, the Board arbitrarily claims that using table funding somehow differentiates the source. This is another case of unsupported proof necessary to justify your inappropriate actions. Following your line of thinking, Ameriquest and Countrywide would be exempt from this rule, if they were in operation today.

For these reasons and more, I’m asking that you withdraw this rule, or delay implementation and defer to the CFPB.  Thank You

To ensure this action reaches as many industry professionals as possible, please forward this action via your database, facebook, twitter and other social media sites.

In addition, please retweet this action to larry_kudlow. Larry is a pro-business, free market advocate, who hosts two shows daily on CNBC. Most industry professionals and politicians watch CNBC. Our audience isn’t mainstream it’s political and business leaders. Copy and paste this tweet:  @larry_kudlow Stop the Fed's unlawful rule on price fixing and restricting mortgage originator compensation. http://bit.ly/g2AfRl

Now is your chance to speak out and defend your profession and customers.

For more information, please contact: Marc Savitt, NAIHP President at:  msavitt@naihp.org This e-mail address is being protected from spambots. You need JavaScript enabled to view it