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Don’t give up and keep calling your elected “representatives” to let them know how parts of this legislation will have a negative impact for the consumer and small business …. There is a sample letter below for you to use.

I also urge you to share this with your realtors and your builders to explain to them the negative impact this language will have on everyone. Again, everyone needs to have their voice heard.

Again, this effects ALL ORIGINATORS and consumers. If you like the way you are compensated on your hard work for helping consumers, then please help.

Wall Street Reform Focuses on Mortgage Issues – Take One More Shot!

During the eight hour conference committee meeting yesterday it became clear that both the House and Senate committee leaders want the compromise to be completed by Thursday so a final version of the bill can go to the floor next week in time for the July 4^th arbitrary deadline they have set for themselves.

The morning was focused on Title X, the Bureau of Consumer Financial Protection. References to the mortgage industry’s contribution to the country’s financial problems were laced throughout the morning session, including comments from Republican Jeb Hensarling from Texas who observed that the only product remotely tied to the financial problems was subprime mortgages.

Focus turned to the mortgage industry and Title XIV at 1:15PM after the lunch break.

The first hour in the afternoon was a selective history lesson led by the House democrats, followed by Christopher Dodd weighing in on how the Senate’s “75 pages” of underwriting requirements is just what is needed to prevent a repeat of the problems driving today’s issues.

In less than an hour of debate on the issues that are important to the mortgage industry and its consumers, the House voted to accept its most current language.

So, where are we now?

HVCC Gone?

The possible (we think probable) good news for consumers, brokers and appraisers is that the House amendments to the bill which were approved by the House include the language that allows brokers back in the appraisal process and sunsets HVCC as soon as regulations are issued (60 days after enactment). The potential problem here is that the Senate counter-offered an amendment removing the House language.

We have gotten this far on the HVCC issue thanks to a lot of behind the scenes work by a diligent group of people including IMMAAG’s friends at the NAIHP who took an early and aggressive lead on the issue last year and have been relentlessly pushing for what is in the House bill. We will continue the work necessary to insure the House language is retained.

Compensation issues

We did not fair as well on the Prohibitions on Steering Incentives and the Ability to Repay language. The language we have been opposing since before the conference began remained in tact and was not really even debated.

So, we have to act on this at least one more time and ACT NOW!

Thanks to efforts by our California colleagues, Republican House member Gary Miller (CA-42^nd district) will be circulating a “sign-in” letter. His letter addresses each of our issues and asks the conferees to consider the changes we have all been seeking. While if offers compromises, if he is successful, it will help everyone and will get us closer to language that will do less harm.

One more call to make - You may receive this one a couple times!

Note: If you received this form more than one source we apologize for the duplication, but this one is important enough to repeat.

Calll your Senators and Representatives and tell them you want them to support Gary Miller’s effort by signing his letter when it is offered.

Just call back, tell them about Rep. Miller’s letter and ask them to sign it.

We know this may seem like a whole lot of work and maybe even futile, but without the constant, persistent outreach it is easy for conferees that are under tremendous time pressure and are looking at 2,000 pages of bills to lose sight of each particular issue. They need to keep hearing from us, from a lot of us – each saying very similar things.

Here is another chance to influence a better outcome than what is there now……

Summary of Requests for Changes in Miller (CA-42) Letter to Conferees

1. Preserve Consumer Options for Payment of Origination Fees

Situation: The bill would prohibit the financing of loan originator compensation if loan originators concurrently receive origination fees from the borrower.

Request: Change the language to allow the payment of origination fees up front and through the interest rate as long as all such fees “were fully and clearly disclosed and agreed to by the consumer earlier in the application process as defined in TILA and do not increase based on changes in the terms of the individual loan or the consumer’s decision about whether to finance such fees or charges.”

Talking Points:

• The current language will create situations where borrowers will have severely limited financing options to meet their needs.

• Language needs to ensure that a borrower has the ability to finance closing costs as they deem appropriate for their individual circumstances (i.e. cash available at closing, length of time planning to remain in home, refinance, etc.)

• Congress should preserve the borrowers’ ability to choose low-cost and zero-point financing for their homes by financing fees and/or costs into the rate or loan amount, while protecting consumers from hidden charges or abuse.

2. Amend Ability to Repay and Safe Harbor Provisions to Protect Borrower Options

Situation: The “ability to repay” language is intended to ensure creditors follow certain underwriting guidelines when making mortgage loans. The language offers a safe harbor which, when conditions are met, grants a presumption to the creditor that these guidelines have been met. Among the conditions are maximum fee bars; if the total fees (as defined by section 103(aa)(4) of TILA) collected exceed the bar of 3%, the presumption will not be offered.

Request: Eliminate the fee cap because it will harm consumers by promoting higher rate steering, reduce competition between delivery channels, and have a negative impact on lower loan amounts.

If the total fee cap language is not removed, change it to a 5% cap and change what is included in the points and fees calculation to protect small loan amounts and consumers seeking non-government financing.

Talking Points:

• A 3% cap will harm consumers by reducing competition between brokers and creditors, since brokers are required to include all origination paid to the company in the 3% cap while creditors are only required to include compensation paid to their loan originator.

• On smaller loans, brokers would exceed the 3%, while creditors could use the invisible “gain on sale” to retain the safe harbor.

• If creditors choose to refuse to lend without the presumption, brokers will be left with a major void in their ability to compete.

• Consumers seeking conventional financing with loan amounts below $200,000 could easily be shut out of the marketplace, unable to obtain financing.

• A better consumer result would be achieved by focusing on more appropriate ways to prove ability to repay than the fee caps.

• The more thorough underwriting standards required by this legislation are key. Ability to repay is better reflected by actual borrower documentation than fee caps.

3. Ensure Liability Provisions Are Fair and Do Not Invite Abuse

Situation: The liability provisions for mortgage originators are overly broad, making mortgage originators liable for acts they have no control over.

Request: Clarify the language in Section 1404 to ensure fairness to mortgage originators and to prevent frivolous lawsuits.

Talking Points:

• Attorney’s Fees

o The current language only allows attorney fees to prevailing consumer plaintiffs but not to prevailing mortgage originator defendants.

o To ensure the legitimate foundation of lawsuits brought under this clause, attorney’s fees should be available to both parties should they prevail.

• Damages

o Language in Section 1404 makes a loan originator liable for every act performed by a creditor that is regulated by Section 129B of Truth in Lending.

o The mortgage broker, who by contract is not an agent of the lender, and who has no underwriting authority or rights, including the authority to decline on behalf of the lender, would become responsible for the lender’s credit decisions.

o Making a mortgage originator liable for underwriting decisions that must be made by another party or a different company (as is the case with a mortgage broker) is patently unfair.