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Residential Department: From the Editor: March 2011


From the Editor

Keeping up with the regulations and legislation affecting the mortgage industry — including changing disclosure requirements, pending compensation changes and the fact that there are at least two regulatory authorities implementing these changes — can be downright confusing for mortgage brokers and others watching the industry.

This past February, just as we were getting ready to go to press, the Federal Reserve Board announced that it likely would not finalize three pending Regulation Z changes before the Consumer Financial Protection Bureau (CFPB) gains regulatory power, which is expected to occur in July.

The Fed's announcement ( put a hold on three changes issued in August 2009 and September 2010 relating to Truth in Lending act (TILA) disclosures for closed-end mortgages, home-equity lines of credit, consumers' rescission rights and reverse mortgages, among other things. The CFPB, which was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is mandated by the act to issue its own proposal for combining TILA and Real Estate Settlement Procedures Act disclosures. As such, the Fed release said, "proceeding with the 2009 and 2010 proposals would not be in the public interest.

Whether this is an indication of future delays remains to be seen as we go to press. as I wrote last month (, there have been calls to delay the loan-originator-compensation changes set to take effect on April 1. Again, this is one area in which the Fed and the CFPB, via the Dodd-Frank Act, each have issued changes.

In the past couple of months, NAMB — The association of Mortgage Professionals along with the Mortgage Bankers Association and the Small Business Administration (SBA) called for the Fed to issue clear guidance about the compensation rule and to delay it. In its Jan. 13 letter to the Fed (, the SBA recommended that "the Board publish a compliance guide in the immediate future and extend the time for small entities to comply to reflect the delay in the availability of the guide."

The Fed did release its compliance guide on Jan. 26 (see it here: At press time, however, the April 1 implementation date was still in place.

Whether the Fed has a change of heart and decides that proceeding with the loan-originator-compensation rule's implementation is not "in the public interest" before rulemaking authority is transferred to the CFPB remains to be seen.


Ivanna C. Sukkar was an editor at Scotsman Guide. For questions on this article, call (800) 297-6061 or e-mail

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