There is a new Federal Reserve rule called “Loan Originator Compensation amendment to Regulation Z” which is part of the Truth in Lending Act. It will take effect April 1, 2011. This rule sets a fixed commission for mortgage brokers tied to the loan terms.
This rule is designed to protect consumers in the mortgage market from unfair or abusive lending practices. It prohibits payments to loan originators based on the terms or conditions of a transaction. Mortgage brokers will now get paid the same amount to process an easy loan or a complex loan. It also prohibits steering a consumer to a lender offering less favorable terms in order to increase the loan originator’s compensation.
This rule applies to all loan originators employed by mortgage brokers or by a creditor (depository institutions and mortgage bankers). Many mortgage brokers are unhappy about this change and some will even be put out of business. The good news is the borrower will end up paying less. Consumers that get a mortgage through a broker will be offered the lowest possible rate and fees for which they qualify.
To see extensive details of Regulation Z go to the web site: http://www.federalreserve.gov/bankinforeg/regzcg.htm
Tammy Hayes, Sandals Realty, Punta Gorda, FL email@example.com