As published in Scotsman Guide's Residential Edition, August 2009.
HVCC. RESPA. S.A.F.E. These acronyms represent three issues among many that are changing the way mortgage brokers do business. The National Association of Mortgage Brokers (NAMB) works and lobbies on behalf of brokers to try to ensure that their businesses survive. Jim Pair, NAMB's new president, talks to us about the association's views and what these issues mean for brokers and consumers.
Why do you want to be president of NAMB now? I think that this is a time that [NAMB's] new incoming officers, board and committee chairs can really make a significant change in what's happening and take advantage of some of the opportunities we have to regrow NAMB and bring it back to the level it was before all this debacle started. One thing we [will] work on this year is [getting] all lenders and originators to disclose all income, including yield-spread premiums and service-release premiums. We'll be advocating for that strongly.
What's your primary goal as president? I wish to rebuild our membership. Over the course of the past few years, a number of members have dropped out of the business. With the S.A.F.E. [Secure and Fair Enforcement for Mortgage Licensing] Act coming into effect, more mortgage originators have to be licensed, especially mortgage bankers. This gives us the opportunity to work with those mortgage bankers in getting their education for their hours and testing.
Why did NAMB withdraw its Home Valuation Code of Conduct (HVCC)-related lawsuit against the Federal Housing Finance Agency (FHFA)? In FHFA's reply on the lawsuit, they stated that because they were in conservatorship, they were not subject to judicial review. Upon the advice of our attorneys, we decided to withdraw the lawsuit without prejudice, [which] allows us to go back in and restart the lawsuit if we so desire.
Now that the HVCC is in effect, what are NAMB's members seeing? We're finding now, from actual experiences, that the cost to consumers is higher. In some instances, consumers not only have to pay more in appraisal fees but also may have to pay for a [rate-] lock extension because [it's taking more time] to get appraisals done now. Also, most appraisals are not transferrable from one lender to another now. So if consumers find a better rate with another lender, they have to pay for another appraisal.
We're not saying that something should not be done. But the manner in which HVCC is done doesn't serve consumers that well.
How will the Real Estate Settlement Procedures Act (RESPA)'s new three-page good-faith estimate affect the mortgage process come January? If we felt like a one-page disclosure that we're using now confused consumers, I think it's going to be really confusing when they look at the [new] three-page disclosure.
Also, the fact that we have to disclose [yield-spread premiums] and other mortgage originators do not have to disclose their additional compensation is confusing to the consumer. [Federal Trade Commission (FTC)] studies have shown that that is true, and in most instances under the FTC studies, consumers picked a product that was more costly to them.
Ivanna C. Sukkar is senior associate editor at Scotsman Guide. Reach her at (800) 297-6061 or firstname.lastname@example.org.