Updated 4/6/11: As expected, the stay has been lifted and the appeal got denied. We are proceeding with the new compensation law. See my previous post regarding its details.
The National Association of Mortgage Brokers won an appeal to the Loan Originator Compensation Law that was set to be in full force today, April 1st. The United States Court of Appeal for the District of Columbia granted a stay on implementation of the rule, so I will keep you updated with where this will go.
The passing of the law will not be good for consumers, even though its intent is honorable. For instance, I locked and submitted a loan yesterday, where I am crediting for all non-recurring closing costs (fees associated with the purchase). Closing costs would amount to ~$3600 for this borrower. Market changes aside, if I locked his loan rate today under the new compensation law, I would not be able to credit anything towards closing costs, and for the same rate, the lender would only credit $1243 towards closing costs. That’s an additional $2357 cost to the borrower because of the new law. I am thrilled a stay has been granted, but not confident it will remain in place.
