Mortgage Brokers Win Appeals Bid to Temporarily Block Fed Loan Fees Rule

In March, Herman, Herman, Katz and Cotlar, L.L.P., was selected by the National Association of Mortgage Brokers (NAMB) to help its fight to preserve the rights of mortgage brokers in their suit filed against the Federal Reserve System.

Today, the Mortgage Brokers won their bid to temporarily delay the implementation of a law that that limits commissions for loan officers in mortgage transactions. The law was originally planned to take effect April 1.

The U.S. Court of Appeals in Washington granted emergency motions from the NAMB and the National Association of Independent Housing Professionals, which argue that the rule unfairly penalizes brokers, who would not be able to pay loan officers from consumer-paid fees.

In a lawsuit filed March 9, NAMB said the rights of mortgage brokers could impact credit opportunities for consumers and limit access to mortgages. The organization felt that the Consumer Financial Protection Bureau is fully capable of performing its mandated responsibilities in this area, and avoiding the unintended consequences of the new rule.

The Federal rule, which is part of the central bank's effort to fix weaknesses in mortgage finance, is aimed at preventing mortgage originators from receiving more compensation for selling home loans with higher interest rates.

Attorney Brian Katz and his clients from NAMB welcome the decision for the delay and were pleased that they won their appeal for a delay, saying that if the organization is able to win their lawsuit, it would be a "victory for consumers" nationwide.