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TransNet
454 Posts |
 Posted - 04/16/2008 : 5:14:34 PM
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Today the FTC filed a Staff Comment to the proposed Fed Board of Governors proposed rule on new TIL regs.
The FTC agrees with most of the rule, but takes issue with the proposal that would require mortgage brokers to disclose their compensation before even taking an application. Thank God someone in the government has a little common sense. Maybe the onerous YSP disclosure provision the Board proposed will not come to light.
Here is a condensed version of the FTC comments to the Board regarding the disclosure of YSP by brokers:
"Broker Compensation Proposal"
"The FTC staff supports the Board’s goal of making mortgage shopping easier but urges the Board to re-consider the Proposed Rule’s provisions on broker compensation disclosures. FTC staff research has shown that broker compensation disclosures are likely to harm consumers and competition. Alternative disclosures that clarify the role of mortgage originators, applied equally to all sectors of the market, would provide greater benefit to consumers and avoid adverse effects on consumers and competition."
"....The Proposed Rule would prohibit lenders from paying a YSP to a mortgage broker unless the payment does not exceed the amount of total compensation that the broker has agreed to in advance with the consumer. ...The broker’s agreement with the consumer also must state that...a lender’s payment to a broker can influence the broker to offer the consumer loan terms or products that are not in
the consumer’s interest or are not the most favorable the consumer could obtain. The broker must enter into this agreement before the consumer has paid any fee or submitted a written application, whichever is earlier..."
"The requirement applies to both prime and subprime loans but not to lender payments to their own loan officers...."
"...(An FTC) study found that...compensation disclosures confused consumers, leading many to choose loans that were more expensive than the available alternatives, and created a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans. The FTC staff concluded, based on the results of its study, that broker compensation disclosures were likely to harm both consumers and competition in the mortgage market...."
"A key argument used to support broker compensation disclosures is that many consumers purportedly view mortgage brokers as trusted advisors who shop for the best loan for the consumer. But broker compensation disclosures, particularly ones that create consumer confusion, are not the appropriate response to this problem. A better remedy would be to require a disclosure that clarified the role of brokers, alerting consumers to the fact that, just like direct lenders, brokers seek to maximize their own profits and may not provide the least expensive loan for which the consumer qualifies. This less restrictive remedy would address the problem without creating consumer confusion or harming competition. Moreover, consumers would benefit most if such a disclosure were required for all mortgage originators, lenders as well as brokers."
http://www.ftc.gov/os/2008/04/V080008frb.pdf
http://www.ftc.gov/opa/2008/04/frb.shtm |
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terry_g
396 Posts |
Posted - 04/16/2008 : 5:19:54 PM
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Thank God somebody at FTC at least had a couple brain cells working. Did this happen while NAMB was sponsoring a golf outing?
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TransNet
454 Posts |
Posted - 04/16/2008 : 5:26:30 PM
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quote:
Originally posted by terry_g
Thank God somebody at FTC at least had a couple brain cells working. Did this happen while NAMB was sponsoring a golf outing?
Actually, NAMB referred to the FTC studies at length in their comments to the Board regarding the proposed TIL reg changes, as did I when I submitted my comments. I have a suspicion that the Board will pay more attention to the FTC comments than to NAMB's comments or even the comments I sent them. 
Here is a link to the comments NAMB submitted:
http://www.namb.org/images/namb/IndustryNews/FRB/NAMB_Comment_Letter_re_Docket_No%20_R-135%20_FINAL_.pdf |
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hherrm
1322 Posts |
Posted - 04/16/2008 : 5:35:09 PM
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| That is the best news I've read in a long time. Thanks for sharing. |
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RodneyLO
800 Posts |
Posted - 04/16/2008 : 5:35:10 PM
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quote:
Originally posted by terry_g
Did this happen while NAMB was sponsoring a golf outing?
No, it happened while they sponsored a NAMBLA meeting. |
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khoiey
1309 Posts |
Posted - 04/16/2008 : 5:36:28 PM
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| Does the FTC really have any juridiction or influence over the FED board's decision? |
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TransNet
454 Posts |
Posted - 04/16/2008 : 6:18:59 PM
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The FTC does not have "jurisdiction" over the Board, but does have influence and their comment will carry some weight in the Board's final rule.
The two agencies do have to work together at times on consumer issues. For example, the FACT Act requires the FTC and the Board to issue joint regulations implementing certain provisions of the law. So the two agencies do have a history of working together. |
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terry_g
396 Posts |
Posted - 04/16/2008 : 6:24:39 PM
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Either way... someone probably was playing with balls and someone probably got a hole-in-one.
quote:
Originally posted by RodneyLO
quote:
Originally posted by terry_g
Did this happen while NAMB was sponsoring a golf outing?
No, it happened while they sponsored a NAMBLA meeting.
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htdifinancial
1511 Posts |
Posted - 04/17/2008 : 07:01:53 AM
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| Good job FTC! |
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goodguy1
1562 Posts |
Posted - 04/17/2008 : 07:17:13 AM
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it's refreshing to see some federal agency actually make a statement that has some positive relevance to our trade.
props to the FTC.
now if only the other boneheads will take heed.. |
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