April 1, 2011 New Mortgage Compensation Rules, a last minute delay for effective date by the courts and this is not even an April Fools joke.
Over the last few months there was a huge buzz about the fed stepping in and telling mortgage brokers how they can make money. There were many people with various versions of what was going to happen, but most people never felt in a "free market" society that it would ever happen.
Well "free market" or not, the fed did decide to step in to tell the mortgage industry how they can make a living. This comes after they changed how the mortgage can order an appraisal back in May 1, 2009. This is referred to as HVCC, which does not allow a mortgage loan officer to choose an appraiser. This has made appraisals increase in cost and has brought many appraisers appear that many lenders and mortgage officers have never heard of. Why? This is because most appraisals are now ordered through an AMC or appraisal management company, which now takes a cut off the top of the cost.
The next major change happened January 1, 2010, which changed the Good Faith Estimate that gets provided to a borrower. This new GFE already seems to be more confusing to borrowers than the old version, but again the government thought this was in the consumers best interest.
Now the federal reserve has decided that based on a study done January 9, 2008 and only included 35 interviews, to make the newest changes in which restricts how a loan officer can be compensated. Again, they state that this is in the borrowers best interest, but every change made thus far seems to only create more confusion and cost borrowers more money.
This is unprecedented in our society, but as the rule was to go into action on April 1, 2011, at the last minute there is a 5 day stay on this new rule as to await the appeal from various parties across the nation.
While this may all sound like an ellaborate April Fools joke, it unfortunately is not. If you want to know more about this, just type in "LO Compensation Rule" into a search engine and you will find more than enough sources of information.
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