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Even Playing Field For Brokers, Bankers

February 4, 2002

Mortgage Brokers Propose Mandatory Disclosure Form For All Originators

Inman News Features

The National Association of Mortgage Brokers has submitted to the U.S. Department of Housing and Urban Development a proposed mortgage disclosure form that would be mandatory for all originators.

NAMB's disclosure is in response to efforts by HUD to clarify certain methods of compensation paid by wholesale mortgage lenders in mortgage broker transactions.

The proposed disclosure is an extension of the NAMB/Mortgage Bankers Association of America Model Loan Origination Agreement developed and approved by NAMB and MBA in 1997. That model is in use today by many mortgage brokers and lenders.

The MBA, Consumer Mortgage Coalition and other banking organizations are in favor of a form that requires disclosure by mortgage brokers only, according to NAMB.

However, loans originated in broker transactions and loans that are funded by lenders with intent to sell within the first six months of funding are the same in form and compensation, the NAMB contends. A universal originator disclosure will provide clearer and more consistent information to consumers, according to NAMB.

NAMB said it believes that to accomplish the goals set forth by HUD in its Oct. 15, 2001 pronouncement, any proposed form should cover as broad a reach of the marketplace as possible. Mortgage brokers have no difficulty in providing such an early disclosure, nor should retail originators, according NAMB.

NAMB, with 13,000 members in 41 state organizations, said its proposed disclosure would help consumers better understand the nature of their relationship with their originator and how the different methods of originator compensation can affect a borrower's interest rate on the loan, their monthly payment and the cash required to close.

The NAMB agreement applies to virtually all loan originations made in the U.S. The only exception would be loans originated by portfolio lenders who service the loan for more than 180 days after closing.

Copyright: Inman News Service

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