Newspaper article THE JOURNAL RECORD

Mortgage Brokers Contest Rules Proposed by HUD

Newspaper article THE JOURNAL RECORD

Mortgage Brokers Contest Rules Proposed by HUD

Article excerpt

Proposed rules that could soon be implemented by the federal Department of Housing and Urban Development have mortgage brokers crying foul, saying the new rules could destroy their industry. The proposed rules impact the mortgage application process and are intended to simplify the process. But brokers say the rules, as currently written, impose new burdens on mortgage brokers that are not shared by other mortgage loan originators.

"The system is kind of broken and it can be better," said Joseph Falk, immediate past president of the National Association of Mortgage Brokers. "We can do this better. Our problem is that the solution that HUD came up with unfortunately disadvantages one origination channel over another."

A'Kos Kovach, president of the Oklahoma Association of Mortgage Brokers, said HUD officials "don't understand what a mortgage broker does" and the proposed rules reflect that fact.

"They think we're nothing but glorified order takers," he said. "So they -- in their infinite wisdom -- have decided to put their thumb on us, require us to do all kinds of disclosures, all kinds of time-consuming fact-finding and record keeping."

Although the form used to generate a "good faith" estimate for mortgage loans currently runs one page in length, the new rules will increase it to four pages, officials said.

Armond Cosenza Jr., president of the National Association of Mortgage Brokers, said that form will require itemization of all charges and fees, which sounds good in theory but is difficult to provide. For example, he noted that mortgage rates change daily and even hourly, and can certainly swing dramatically between the time someone applies for a loan and the time of actual approval.

Mortgage brokers also say the proposed rules exempt mortgage bankers from those disclosure requirements. As a result, bankers can provide quotes that appear lower than the estimates provided by brokers.

"It's not apples to apples," Cosenza said.

He said the proposed rules would allow mortgage bankers to "get away with hiding information away from the consumer. …

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