Posted On: March 29, 2011

FDIC RELEASES QUALIFIED RESIDENTIAL MORTGAGE "QRM" PROPOSAL TODAY

The Federal Deposit Insurance Corporation, US Securities & Exchange Commission, Federal Reserve System, Federal Housing Finance Agency, and Department of Housing and Urban Development unveiled their new risk retention proposal today. The QRM proposal would mandate that banks maintain at least five (5%) percent of the risk of mortgage securities they package.

The proposed QRM rule is already controversial because of concerns the rule will further eliminate competition in the mortgage industry, drive up consumer costs, and slow housing sales even further. The controversy isn't expected to die either because of language in the proposal that prohibits real estate agents and brokers from donating or "Gifting" part of their commission to borrowers at the transaction. Under the proposal the real estate agents and/or brokers would need to adjust the sales price downward if they want to provide a "Gift" to a borrower for a transaction. The Gift language prohibition could trigger disclosure issues in connection with a loan. (See page 198 of 233) of QRM proposal.

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Posted On: March 14, 2011

STERBCOW LAW GROUP FILES LAWSUIT ON BEHALF OF THE NATIONAL ASSOCIATION OF MORTGAGE BROKERS "NAMB" AGAINST THE FEDERAL RESERVE SYSTEM ON LOAN OFFICER COMPENSATION RULE

On March 9, 2011, Saul Ewing, LLP; Herman, Herman, Katz & Cotlar, and Sterbcow Law Group LLC, filed a lawsuit on behalf of the National Association of Mortgage Brokers (NAMB) against the Board of Governors Of The Federal Reserve System; Honorable Ben S. Bernanke, Chairman of the Board of Governors of the Federal Reserve System; and Sandra F. Braunstein, Director,Division of Consumer Affairs, Board of Governors of the Federal Reserve System, seeking temporary and preliminary restraints to delay the April 1, 2011 implementation of the loan originator compensation rule under the Truth-in-Lending Act.

The lawsuit, (Case 1:11-cv-00506-RLW) filed in the U.S. District Court for the District of Columbia, is based on the rule prohibiting mortgage brokers from paying their loan officers commissions from fees paid by the consumer, which will cause irreparable harm to small businesses. NAMB is seeking the Federal Reserve Board to avoid the effects of its rule by withdrawing this section of the rule and allowing the Consumer Financial Protection Board to perform its mandated responsibilities in this area.

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