The National Association of Mortgage Brokers (NAMB) has sent an alert to its members urging them to urge their congressional representatives to oppose the national financial overhaul legislation that is scheduled for a vote in mid-July.
NAMB president Roy DeLoach told his membership that the new legislation would hurt competition in the mortgage market and put smaller mortgage brokers out of business.
The NAMB’s main bones of contention center around the cap on fees and the elimination of yield-spread premiums, which are deal payments mortgage brokers receive for steering borrowers to a certain type of loan product or rate.
Unsurprisingly, NAMB is getting push-back from consumer groups, who blame mortgage brokers in part for the subprime lending mess. However, DeLoach says that brokers are not to blame; in a Wall Street Journal article he noted, “Brokers did not invent these products. We didn’t underwrite these products. And we didn’t fund these products.”
The Mortgage Bankers Association said it is not actively opposing the legislation.
Part of the financial overhaul legislation package requires lenders to retain 5% of the credit risk on loans that carry fees higher than 3% in an effort to make it more difficult for brokers to load up loans with extra fees.