In The News
Fed Responds to NAIHP & NAMB Complaints
Latest News on Fed Lawsuit
Timeline:
NAIHP’s lawsuit was filed on March 7, 2011, in U.S. District Court in Washington, D.C. On March 9th, NAMB filed suit against the Fed in the same court. The cases were consolidated on March 11, 2011.
March 14, 2011: Without notification to NAIHP, or their legal team, NAMB motioned the court to de-consolidate the cases. The Fed is required to address NAMB’s motion on 3/17/11. The Judge will then rule on the motion.
March 18, 2011: Deadline for the Fed to answer complaints filed by both NAIHP and NAMB.
March 25, 2011: Deadline for NAIHP and NAMB to respond to the Fed’s answer. Shortly after plaintiff’s (consolidated) response, Judge Howell will rule on the case.
Lawsuit Update
National Association of Independent Housing Professionals (NAIHP)
v.
The Federal Reserve Board of Governors
It has come to my attention certain persons within NAMB, have been insinuating difficulties with our lawsuit against the Fed, because our attorney will be changing law firms.
For the record, when NAIHP engaged Attorney Stephen Hill, Esq., to represent us in our action against the Fed, Mr. Hill advised us, he may be changing law firms in the near future.
When NAIHP began interviewing attorneys several months ago, we sought out Mr. Hill, because of his outstanding qualifications and track record of success. Regardless of the law firm where he hangs his shingle, Mr. Hill will continue to represent NAIHP, without interruption.
Stephen Hill holds both an undergraduate degree and a law degree (JD), from Harvard University. He’s been practicing law in Washington, D.C. for close to 35 years.
It’s unfortunate; NAIHP must endure continued attacks by some in our own industry. Regardless of these attacks, we will continue to move forward in the best interest of all housing industry professionals.
Federal Reserve Board files Motion to Consolidate NAIHP & NAMB Lawsuits
NEW: Court orders NAIHP and NAMB to consolidate suits
Today, the Federal Reserve Board filed a Motion in U.S. District Court to consolidate lawsuits filed against the FRB by the National Association of Independent Housing Professionals (NAIHP) and the National Association of Mortgage Brokers (NAMB).
This move was predictable by the Fed, according to Marc Savitt, NAIHP President. The only reason NAMB was originally assigned a separate Judge, was because their legal counsel failed to acknowledge another related case (NAIHP), had previously been filed.
NAIHP has always believed a united front, would enable our industry to prevail in this matter. We look forward to working with NAMB, to achieve success for consumers and the mortgage/housing industry.
A message from NAIHP President Marc Savitt, to all mortgage brokers, originators and NAMB
I’m writing you today, not as President of NAIHP, but as a 30 year veteran of the mortgage brokerage industry.
On Saturday afternoon (February 19th), NAMB released a video by GA Chair Mike Anderson, where he stated, “The time has come to take the next step.” He was speaking specifically about the Fed’s rule on originator compensation. While I’m glad NAMB has finally come to this realization and caught up to the rest of the industry, I’m concerned they’ve decided to go it alone.
On three separate occasions since February of 2010, industry professionals approached both NAIHP and NAMB, about working together for the betterment of the industry. NAIHP immediately accepted each invitation, only to be turned down by NAMB. Not only did they refuse to join a coalition, they were successful in having the MBA back out of a planned meeting with NAIHP, IMMAAG and the Fed. NAMB was also invited to join with NAIHP in our legal action against the Fed. We’re still waiting for an answer.
Filing suit against the federal government is a major undertaking that requires substantial research and careful planning. It’s not something you can slap together in a hurry, if you expect to prevail. Moreover, the process often turns out more costly than anticipated. Therefore, you need to be prepared for additional costs. You fundraise first, then file, not the other way around.
NAMB’s video on Saturday, sent mixed messages. In just one sentence Anderson said, “We have a high probability of getting an injunction, so I don’t want to sugar coat this and we’re extremely optimistic.” Shortly before he made this statement a subtitle read, “We must stress no guarantee of a restraining order.” One of the last subtitles of the video states, “Let’s fight, hopefully we’ll prevail.” To quote an old saying, “Hope is not a strategy.”
To me, this obvious lack of confidence is evidence that their rushed filing is more about NAMB hoping that they’ll be seen as doing “something” rather than the one thing that has the best chance of success for the industry.
NAIHP has been preparing our suit against the Fed for almost 2 months. This included, interviewing law firms, lining up expert witnesses, research, countless hours of planning and most importantly, raising funds. With respect to funds, NAIHP made a pledge to all those who contributed. Every dime of your donation will be used exclusively for the lawsuit. Funds will be held in a separate account and any donations not used, will be refunded to contributors on a prorated basis.
Since NAMB’s video was released, I’ve received numerous emails and text messages, supporting our approach and urging me to continue with our lawsuit. I can assure everyone, NAIHP will continue on this path, as well as pursue all other options to stop this illegal rule. NAIHP will file their action at the appropriate time prior to April 1st. It’s not about who gets to the courthouse first, it’s about being prepared for what happens in court and giving our industry the absolute best chance of success with this filing.
As a Past President and Honorary Member of NAMB, I am again urging NAMB to join our legal team, where much of the legal preparation has been completed. Should NAMB jump too quickly and be denied an injunction, which is a major concern of Anderson's, as evidenced by his video, it may very well adversely affect the outcome of industry efforts to stop the rule. It’s better for everyone to work in a consolidated effort than a fragmented approach.
My door is always open!
Marc Savitt, President NAIHP
2008-2009 NAMB President
2006 NAMB Broker of the Year
2004 NAMB Government Affairs Chairman
A Message from NAIHP President Marc Savitt
As we approach the first anniversary of NAIHP, I’d like to take this opportunity to update our membership and other housing industry professionals on legislative and regulatory matters.
From the beginning, our goal was to create a nationwide grassroots organization, comprised of independent, small business housing professionals. I’ve always believed all housing professionals share common problems and therefore should stand united against them. I’m happy to say, our membership includes brokers, appraisers, originators for lenders and small banks, title insurers, real estate agents, home builders, attorneys and consumers.
Being a grassroots organization, we depend on membership for success. That dependence comes in two forms, membership dues and your legislative contacts.
NAIHP dues are only $50.00 a year. As working professionals ourselves, we understand the financial challenges facing the housing industry today. It was for this reason; we made a promise to never increase our dues.
For those of you who are our members thank you for your support this year. Many of you reading this message, who are not members, have contacted me during the past year, both for information and to “vent” about the continued attack on our professions. As you know, I’ve always taken the time to explain the issues and what you could do to help. However, as we begin our second year, I’m asking that you join our grassroots organization and help make a difference.
Because I’ve been involved in government affairs and trade associations for many years, I understand how some professionals feel. They believe their dues won’t make a difference, so there’s no need to contribute. Some rely on others to “carry the water for them.” Others feel trade associations are always asking for money. In my opinion, this type of thinking is extremely detrimental to the housing industry and our livelihoods. The truth is we need your dues and professional experience to be successful. Operating an association is similar to the way you run your business. If you didn’t receive monetary support, you wouldn’t be able to serve your customers. Remember, it’s all about strength in numbers.
Please take a few minutes right now and become a member of our team. We’ve made it easy for you, just go to our website, www.naihp.organd click on the “JOIN” tab.
Last year, we hit the ground running and jumped right into the worst legislative and regulatory onslaught the housing industry has ever seen. One of the worst issues was the Home Valuation Code of Conduct, or HVCC. This “guidance,” adopted by the GSE’s from their HVCC agreement with Andrew Cuomo, was nothing short of a “plea agreement” to avoid exposure of misconduct. Although, intended to eliminate conflicts of interest and fraud, HVCC has had the opposite effect. Recent independent reports and studies have concluded valuation fraud increased well over 50%, since HVCC was implemented on May 1, 2009. Moreover, appraisal quality decreased, tens of thousands of professionals lost their jobs, or went out of business and consumer costs increased by an estimated 2.8 billion dollars a year.
While some embraced HVCC and found a way to profit from it, NAIHP took a stand to repeal it! Since the implementation of HVCC, I’ve had 5 personal meetings with the N.Y. Attorney General’s office, 7 meetings with the General Counsel for the FHFA, twice testified before Congress, met with numerous members of Congress, federal agencies and consumer groups, and was interviewed several times by Fox News, CNN and by countless print publications. Needless to say, we fought to get the word out on the harmful effects of the code and why it should be repealed.
This past summer, we thought we had it fixed. An amendment to the Financial Reform Bill, removed the prohibition excluding brokers and originators from ordering appraisals. This action would have gone a long way to curing the problem of appraiser independence, customary and reasonable fees and appraisal portability. NAIHP had certain “written” assurances from a respected Congressional leader, who at the last minute withdrew his support in place of a “portability amendment.” Although, this was disappointing to everyone, NAIHP continued to move forward.
The Dodd-Frank law required appraiser independence “interim” rules be established within 90 days of the law’s enactment. NAIHP worked non-stop to provide the Federal Reserve Board, with documentation supporting a revision to Dodd-Frank. I’m happy to report; the FRB’s interim rules did NOT include the broker/originator prohibition on ordering appraisals.
As many of you know, Fannie and Freddie’s regulator (FHFA) recently released their new guidelines on HVCC. Welcome to HVCC 2. The new guidelines still prohibit brokers/originators from ordering appraisals. We all know the only way to achieve appraiser independence, customary and reasonable fees and portability of appraisals is to let the brokers/originators back into the process. The FRB understands it, but the GSE’s are still playing the cover up game.
Although, the FRB gave all of us a much needed victory, we still have more work to do. However, that victory put us within striking distance of restoring the marketplace to one of earning business, not buying it.
I urge you to support us, because trade groups like TAVMA, who represent the AMC’s, will be fighting us every inch of the way.
Originator compensation is another important issue. This past summer, both the FRB and Congress, placed restrictions and prohibitions against compensation for all originators. Although, it includes brokers, originators working for brokers and originators working for banks, it doesn’t include the banks themselves.
In August of 2009, the FRB proposed a rule on originator compensation. We participated in personal meetings with the FRB regarding this issue and held a “call to action,” during the comment period. This past spring, the Senate Banking Committee introduced a Financial Reform Bill, designed as a “sweeping overhaul” of Wall Street. During the bill’s debate, an amendment was introduced late one evening, known as the Merkley amendment. The Senate held a vote for the amendment within hours of its introduction and before industry could effectively react to the bill.
At issue is, a 3% safe harbor on originator compensation and tying compensation to a borrower’s ability to repay a loan. In addition, originators may receive their compensation either directly or indirectly, but NOT BOTH!
While some groups were complaining about the sneaky way this amendment was handled (that’s Washington folks), NAIHP went right to the root cause of the issue. We requested and attended 3 meetings with Senator Merkley and his staff. During that process, we addressed 2 important unintended consequences, besides the overall amendment itself. The amendment failed to take into consideration smaller loan amounts and the consequences of a “paper deduction” of 1% for any UPFRONT (not monthly), mortgage insurance or guarantee. In the end, the 1% deduction was eliminated, except for PMI. NAIHP is still working on this issue with MI companies.
The FRB’s now final rule is more problematic. It eliminates competition and clearly picks winners and losers. While some first applauded this rule, NAIHP knew it would be a problem from the beginning. In a conference call with the FRB, after the rule was finalized, we asked some very tough questions in scenario form. It some cases the Fed didn’t have answers.
This rule amends the Truth in Lending Act. After careful examination by industry and legal professionals, it appears the FRB may have overstepped their authority. NAIHP will continue to research options to repeal this rule. Make no mistake about it, we are committed to REPEAL and will use all recourses available, including our coalition with other trade groups.
Within the past 2 years, we’ve seen restrictions on broker, originator and appraiser compensation. Now, we’re starting to see signs of real estate agent commissions under fire. The consumer is best protected in a free market society, where competition controls costs.
Other issues we’re currently working on, but not limited to, elimination of the mortgage interest tax deduction by the Obama Administration, extension of full Safe Act requirements to all originators, regardless of where employed and prohibition of bank owned appraisal management companies.
Lastly, NAIHP will introduce its “Ambassador” program on November 1, 2010. Each state will have one Ambassador, who will be responsible for promoting membership and coordination of NAIHP activities within their states.
Thank You,
Marc
Breaking News!!
House Financial Services Committee Press Release
NAIHP is comparing the HFSC Press Release with base text from the conference committee and will report back to our membership shortly.
NAIHP holds third round of discussions with Senator Merkley’s staff
Watch for NAIHP’s Call to Action.
Fannie/Freddie Regulator creates illusion of HVCC success
Legislative Update
5/20/10
S. 3217 Restoring American Financial Stability Act of 2010 and SA. 4007 HVCC Amendment:
The Senate voted today to invoke “cloture” on the Financial Reform Bill (S.3217), which cut off debate and acceptance of amendments. SA.4007 was NOT included in the final version of S.3217.
Earlier this evening, the Senate passed the final bill by a vote of 59-39. Story
What Now? The bill will now be reconciled with the House version (HR 4173) in conference committee, where the differences are settled. Both the House and Senate will then vote again on the merged/compromised bill, which then goes to the president for signature.
The HVCC Amendment is still alive! Because the House included an HVCC amendment in HR 4173, it must be considered in any compromise negotiations. Rep. Travis Childers (one sponsor of the bill), along with other House members, have pledged to do all they can to keep the amendment language in the final compromised bill.
S.3266 Rural Housing Preservation and Stabilization Act of 2010
This bill, which involves funding for the USDA 502 Guaranteed Loan Program, has been stalled in the Senate for almost 2 weeks, while debate continued on the Financial Reform bill. However, late last week, S.3266 was merged with S.4899, an emergency appropriations bill. S.4899 is expected to be brought to the floor within the next few days.
SA 3962 Merkeley/Klobuchar Amendment on originator compensation.
NAIHP met with senior staff from Senator Merkeley’s office last week and today, 5/20/10. During the meetings, we highlighted certain “unintended consequences,” along with areas of confusion and/or contradiction. The Senator’s office was responsive to our concerns and will be making certain corrections during the conference committee.
The staff wanted to ensure we understood the following:
There is NO ban on YSP. 2. The restrictions affect all originators, not just mortgage brokers. 3. YSP and SRP are considered “in-direct” compensation. 4. There is NO 3% cap. The 3% involves the safe harbor provision. If an originator exceeds the 3%, they lose the presumption of the borrower’s ability to repay the loan. However, if the originator has followed guidelines to be established by the CFPA (verification of income), they would NOT be in violation, even if their compensation exceeded 3%. 5. Originators can only receive compensation from one source. This means, you can be paid by the borrower(s), or in-direct compensation, but not both.
To be clear, NAIHP opposes this amendment for several reasons. One reason is originator compensation has nothing to do with a borrower’s ability to repay a loan. Another reason is, once again consumers lose options and choice. Many consumers like to include some of their origination costs in their rate, along with some up front or out of pocket costs.
Additional updates will be broadcast as events happen.
HVCC destroys small business, creates massive unemployment, erodes home equity, all while doing nothing to reduce valuation fraud!!
The Property Valuation Fraud Risk Index decreased 4% from the previous quarter, the first • such decline since Q4 2007. Despite the quarter-on-quarter decrease, this index is up 40% over the last year and up more than 100% from two years ago. View the report.
ABC News: New Rules for Disclosing Closing Costs.
Congressional Commission holds hearing with bank chiefs.
CNN-Money."Fed says, don't blame the FED
Wall Street Journal RESPA and the new