NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB files 2nd lawsuit this week against Federal Reserve

NAMB, the National Association of Mortgage Brokers today filed the second lawsuit this week against Federal Reserve Board over the new Lender Compensation rules set to begin April 1, 2011.

NAMB’s lawsuit seeks to obtain a temporary restraining order, and is using different arguments than the lawsuit filed by NAIHP on March 7th to stop the new mortgage lender rules.

NAMB files 2nd lawsuit this week against Federal Reserve

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Loan Officer Compensation: Overtime Pay or No Overtime Pay?

The Mortgage Bankers Association has filed suit in federal court in an effort to reverse a March 2010 ruling by the Department of Labor (DOL) requiring that loan officers be paid overtime. That DOL Wage and Hour Division Administrators Interpretation reversed a previous opinion that MBA members had been operating under since 2006 that had exempted mortgage loan officers from the overtime provision of the Fair Labor Standards Act (FLSA.)

FLSA, which was originally enacted in 1938, requires that employers covered by the statute pay overtime wages to employees who work more than 40 hours per week unless they are specifically exempted. Such an exemption applies to employees operating in a bona fide administrative capacity.

The regulations defining FLSA requirements have been periodically revised, most recently in August 2004 and, according to the suit, until last March these revisions were announced by written "Opinion Letters" in response to questions from private parties about application of the regulations and these Opinion Letters have been held by courts to constitute final agency action. MBA maintains that since March 2010 DOL has issued "Administrator Interpretations" without prior notice or any opportunity for public comment or public hearings.

In August 2004 DOL promulgated a regulation that said employees in the financial services industry generally meet the duties requirements for the administrative exemption if those duties include work such as collecting and analyzing customer information, determining and advising the customer on which financial products meet his needs, and marketing, servicing or promoting the employers financial products. "However, an employee whose primary duty is selling financial products does not qualify for the administrative exemption." Other language, however, somewhat exempted an employee whose administrative duties included some sales.

On September 8 2006, DOL sent MBA an Opinion Letter in which it opined that employees largely employed to fulfill administrative functions but who also performed a marketing function still qualified for the exemption. MBA said in its suit that, in reliance on this interpretation, employers in the financial services industry, have classified mortgage loan officers as exempt employees and as such they generally are not paid hourly or overtime wages, "but are well-compensated by other means, including salary, bonus and commissions."

On March 24, DOL issued an Interpretation reversing and withdrawing the 2006 letter and declaring that a loan officer "whose hypothetical 'typical' job duties were to "receive internal leads and contact potential customers or receive contacts from customers generated by direct mail or other marketing activity...collect required financial information from customers they contact or who contact them...assess the loan products identified and discuss with the customers the terms and conditions of particular loans, trying to match the customers' needs with one of the company's loan products..." had a primary duty of non-administrative-exempt sales, and did not qualify for the FLSA;s administrative exemption.

MBA claims that DOL has admitted that this letter represented a substantial change in its interpretation of its own regulation and that it was issued without any prior public notice or without providing any prior opportunity for MBA or other interested parties to comment or without holding or offering to hold public hearings.

The Association said that its members and other interested parties now face substantial exposure to lawsuits alleging that "well-compensated mortgage loan officers are misclassified and are entitled to collect both back overtime wages and penalties." MBA President and CEO John Courson said that the ruling could also require lenders to make costly changes to their internal operations and compensation structure and that these costs would be passed through to the consumer. The regulations, he said, will also deprive loan officers and their customers of the flexible schedules they have enjoyed without increasing their compensation.

The suit asks the court to declare that DOL violated the Administrative Procedures Act under which the suit is filed and to set aside the Administrator's Interpretation and prevent its application and enforcement.

by Jann Swanson Mortgage News Daily January 12, 2011



Loan Officer Compensation: Overtime Pay or No Overtime Pay?

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

The Federal Reserve Board today announced a batch of final and interim rules designed to increase the transparency of the mortgage origination and disclosure processes. The Fed is also proposing a number of rules to improve the clarity and accountability around reverse and jumbo mortgage origination.

The Fed released final rules restricting an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. The new rules apply to mortgage brokers and the companies that employ them, as well as loan officers employed by depository institutions and other lenders.

Some originators — like brokers — have been the object of public criticism for allegedly steering borrowers into loans with interest rates higher than the rate required by lenders, in order to receive higher yield-spread premiums.

"This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points," the Fed said. "Loan originators can continue to receive compensation that is based on a percentage of the loan amount, which is a common practice."

The final rule also prohibits originators from receiving compensation directly from consumers while also receiving compensation from the lender or another third party.

"In consumer testing, the board found that consumers generally are not aware of the payments lenders make to loan originators and how those payments can affect the consumer's total loan cost," the Fed said. "The new rule seeks to ensure that consumers who agree to pay the originator directly do not also pay the originator indirectly through a higher interest rate, thereby paying more in total compensation than they realize."

The Fed also announced final rules to implement an amendment to the Truth in Lending Act that requires consumers be given notice within 30 days of the sale or transfer of their mortgage loan.

Additionally, the Fed issued an interim rule that revises disclosure requirements for closed-end mortgage loans under Regulation Z — or Truth in Lending regulations. Under the interim rule, lenders must include a payment summary table outlining the initial interest rate together with the corresponding monthly payment.

Lenders must also include the maximum interest rate and payment that can occur during the first five years of an adjustable-rate mortgage, as well as a "worst case" example showing the minimum rate and payment possible over the life of the loan. Lenders complying with the interim rule must also disclose the fact that consumers may not be able to avoid payment increases through refinancing.

Along with the final and interim rules, the Fed proposed consumer protections and disclosures on mortgage transactions. As the second phase of the Fed's review and update of mortgage rules, the proposal would affect Reg Z.

The proposal would improve disclosures that consumers receive for reverse mortgages and impose rules for accurate product representation in reverse mortgage advertising. It would also prohibit certain unfair practices in the sale of financial products related to reverse mortgages.

The Fed's proposal would improve disclosures of borrowers' rights to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right. Additionally, it would ensure consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

The Fed also proposed a rule to revise the escrow account requirements for higher-priced first-lien jumbo mortgage loans. The rule would implement a provision of the Dodd-Frank Act and increase the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien jumbos.

The rule would implement the Dodd-Frank provision to increase the APR threshold to 2.5 percentage points — from the current 1.5 percentage points.

by Diana Golobay HousingWire August 16, 2010

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

The Federal Reserve Board today announced a batch of final and interim rules designed to increase the transparency of the mortgage origination and disclosure processes. The Fed is also proposing a number of rules to improve the clarity and accountability around reverse and jumbo mortgage origination.

The Fed released final rules restricting an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. The new rules apply to mortgage brokers and the companies that employ them, as well as loan officers employed by depository institutions and other lenders.

Some originators — like brokers — have been the object of public criticism for allegedly steering borrowers into loans with interest rates higher than the rate required by lenders, in order to receive higher yield-spread premiums.

"This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points," the Fed said. "Loan originators can continue to receive compensation that is based on a percentage of the loan amount, which is a common practice."

The final rule also prohibits originators from receiving compensation directly from consumers while also receiving compensation from the lender or another third party.

"In consumer testing, the board found that consumers generally are not aware of the payments lenders make to loan originators and how those payments can affect the consumer's total loan cost," the Fed said. "The new rule seeks to ensure that consumers who agree to pay the originator directly do not also pay the originator indirectly through a higher interest rate, thereby paying more in total compensation than they realize."

The Fed also announced final rules to implement an amendment to the Truth in Lending Act that requires consumers be given notice within 30 days of the sale or transfer of their mortgage loan.

Additionally, the Fed issued an interim rule that revises disclosure requirements for closed-end mortgage loans under Regulation Z — or Truth in Lending regulations. Under the interim rule, lenders must include a payment summary table outlining the initial interest rate together with the corresponding monthly payment.

Lenders must also include the maximum interest rate and payment that can occur during the first five years of an adjustable-rate mortgage, as well as a "worst case" example showing the minimum rate and payment possible over the life of the loan. Lenders complying with the interim rule must also disclose the fact that consumers may not be able to avoid payment increases through refinancing.

Along with the final and interim rules, the Fed proposed consumer protections and disclosures on mortgage transactions. As the second phase of the Fed's review and update of mortgage rules, the proposal would affect Reg Z.

The proposal would improve disclosures that consumers receive for reverse mortgages and impose rules for accurate product representation in reverse mortgage advertising. It would also prohibit certain unfair practices in the sale of financial products related to reverse mortgages.

The Fed's proposal would improve disclosures of borrowers' rights to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right. Additionally, it would ensure consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

The Fed also proposed a rule to revise the escrow account requirements for higher-priced first-lien jumbo mortgage loans. The rule would implement a provision of the Dodd-Frank Act and increase the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien jumbos.

The rule would implement the Dodd-Frank provision to increase the APR threshold to 2.5 percentage points — from the current 1.5 percentage points.

by Diana Golobay HousingWire August 16, 2010

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

The Federal Reserve Board today announced a batch of final and interim rules designed to increase the transparency of the mortgage origination and disclosure processes. The Fed is also proposing a number of rules to improve the clarity and accountability around reverse and jumbo mortgage origination.

The Fed released final rules restricting an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. The new rules apply to mortgage brokers and the companies that employ them, as well as loan officers employed by depository institutions and other lenders.

Some originators — like brokers — have been the object of public criticism for allegedly steering borrowers into loans with interest rates higher than the rate required by lenders, in order to receive higher yield-spread premiums.

"This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points," the Fed said. "Loan originators can continue to receive compensation that is based on a percentage of the loan amount, which is a common practice."

The final rule also prohibits originators from receiving compensation directly from consumers while also receiving compensation from the lender or another third party.

"In consumer testing, the board found that consumers generally are not aware of the payments lenders make to loan originators and how those payments can affect the consumer's total loan cost," the Fed said. "The new rule seeks to ensure that consumers who agree to pay the originator directly do not also pay the originator indirectly through a higher interest rate, thereby paying more in total compensation than they realize."

The Fed also announced final rules to implement an amendment to the Truth in Lending Act that requires consumers be given notice within 30 days of the sale or transfer of their mortgage loan.

Additionally, the Fed issued an interim rule that revises disclosure requirements for closed-end mortgage loans under Regulation Z — or Truth in Lending regulations. Under the interim rule, lenders must include a payment summary table outlining the initial interest rate together with the corresponding monthly payment.

Lenders must also include the maximum interest rate and payment that can occur during the first five years of an adjustable-rate mortgage, as well as a "worst case" example showing the minimum rate and payment possible over the life of the loan. Lenders complying with the interim rule must also disclose the fact that consumers may not be able to avoid payment increases through refinancing.

Along with the final and interim rules, the Fed proposed consumer protections and disclosures on mortgage transactions. As the second phase of the Fed's review and update of mortgage rules, the proposal would affect Reg Z.

The proposal would improve disclosures that consumers receive for reverse mortgages and impose rules for accurate product representation in reverse mortgage advertising. It would also prohibit certain unfair practices in the sale of financial products related to reverse mortgages.

The Fed's proposal would improve disclosures of borrowers' rights to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right. Additionally, it would ensure consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

The Fed also proposed a rule to revise the escrow account requirements for higher-priced first-lien jumbo mortgage loans. The rule would implement a provision of the Dodd-Frank Act and increase the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien jumbos.

The rule would implement the Dodd-Frank provision to increase the APR threshold to 2.5 percentage points — from the current 1.5 percentage points.

by Diana Golobay HousingWire August 16, 2010

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

The Federal Reserve Board today announced a batch of final and interim rules designed to increase the transparency of the mortgage origination and disclosure processes. The Fed is also proposing a number of rules to improve the clarity and accountability around reverse and jumbo mortgage origination.

The Fed released final rules restricting an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. The new rules apply to mortgage brokers and the companies that employ them, as well as loan officers employed by depository institutions and other lenders.

Some originators — like brokers — have been the object of public criticism for allegedly steering borrowers into loans with interest rates higher than the rate required by lenders, in order to receive higher yield-spread premiums.

"This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points," the Fed said. "Loan originators can continue to receive compensation that is based on a percentage of the loan amount, which is a common practice."

The final rule also prohibits originators from receiving compensation directly from consumers while also receiving compensation from the lender or another third party.

"In consumer testing, the board found that consumers generally are not aware of the payments lenders make to loan originators and how those payments can affect the consumer's total loan cost," the Fed said. "The new rule seeks to ensure that consumers who agree to pay the originator directly do not also pay the originator indirectly through a higher interest rate, thereby paying more in total compensation than they realize."

The Fed also announced final rules to implement an amendment to the Truth in Lending Act that requires consumers be given notice within 30 days of the sale or transfer of their mortgage loan.

Additionally, the Fed issued an interim rule that revises disclosure requirements for closed-end mortgage loans under Regulation Z — or Truth in Lending regulations. Under the interim rule, lenders must include a payment summary table outlining the initial interest rate together with the corresponding monthly payment.

Lenders must also include the maximum interest rate and payment that can occur during the first five years of an adjustable-rate mortgage, as well as a "worst case" example showing the minimum rate and payment possible over the life of the loan. Lenders complying with the interim rule must also disclose the fact that consumers may not be able to avoid payment increases through refinancing.

Along with the final and interim rules, the Fed proposed consumer protections and disclosures on mortgage transactions. As the second phase of the Fed's review and update of mortgage rules, the proposal would affect Reg Z.

The proposal would improve disclosures that consumers receive for reverse mortgages and impose rules for accurate product representation in reverse mortgage advertising. It would also prohibit certain unfair practices in the sale of financial products related to reverse mortgages.

The Fed's proposal would improve disclosures of borrowers' rights to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right. Additionally, it would ensure consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

The Fed also proposed a rule to revise the escrow account requirements for higher-priced first-lien jumbo mortgage loans. The rule would implement a provision of the Dodd-Frank Act and increase the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien jumbos.

The rule would implement the Dodd-Frank provision to increase the APR threshold to 2.5 percentage points — from the current 1.5 percentage points.

by Diana Golobay HousingWire August 16, 2010

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire

The Federal Reserve Board today announced a batch of final and interim rules designed to increase the transparency of the mortgage origination and disclosure processes. The Fed is also proposing a number of rules to improve the clarity and accountability around reverse and jumbo mortgage origination.

The Fed released final rules restricting an originator from receiving compensation based on the interest rate or other loan terms of the mortgage. The new rules apply to mortgage brokers and the companies that employ them, as well as loan officers employed by depository institutions and other lenders.

Some originators — like brokers — have been the object of public criticism for allegedly steering borrowers into loans with interest rates higher than the rate required by lenders, in order to receive higher yield-spread premiums.

"This will prevent loan originators from increasing their own compensation by raising the consumers' loan costs, such as by increasing the interest rate or points," the Fed said. "Loan originators can continue to receive compensation that is based on a percentage of the loan amount, which is a common practice."

The final rule also prohibits originators from receiving compensation directly from consumers while also receiving compensation from the lender or another third party.

"In consumer testing, the board found that consumers generally are not aware of the payments lenders make to loan originators and how those payments can affect the consumer's total loan cost," the Fed said. "The new rule seeks to ensure that consumers who agree to pay the originator directly do not also pay the originator indirectly through a higher interest rate, thereby paying more in total compensation than they realize."

The Fed also announced final rules to implement an amendment to the Truth in Lending Act that requires consumers be given notice within 30 days of the sale or transfer of their mortgage loan.

Additionally, the Fed issued an interim rule that revises disclosure requirements for closed-end mortgage loans under Regulation Z — or Truth in Lending regulations. Under the interim rule, lenders must include a payment summary table outlining the initial interest rate together with the corresponding monthly payment.

Lenders must also include the maximum interest rate and payment that can occur during the first five years of an adjustable-rate mortgage, as well as a "worst case" example showing the minimum rate and payment possible over the life of the loan. Lenders complying with the interim rule must also disclose the fact that consumers may not be able to avoid payment increases through refinancing.

Along with the final and interim rules, the Fed proposed consumer protections and disclosures on mortgage transactions. As the second phase of the Fed's review and update of mortgage rules, the proposal would affect Reg Z.

The proposal would improve disclosures that consumers receive for reverse mortgages and impose rules for accurate product representation in reverse mortgage advertising. It would also prohibit certain unfair practices in the sale of financial products related to reverse mortgages.

The Fed's proposal would improve disclosures of borrowers' rights to rescind certain mortgage transactions and clarify the responsibilities of the creditor if a consumer exercises the right. Additionally, it would ensure consumers receive new disclosures when the parties agree to modify the key terms of an existing closed-end mortgage loan.

The Fed also proposed a rule to revise the escrow account requirements for higher-priced first-lien jumbo mortgage loans. The rule would implement a provision of the Dodd-Frank Act and increase the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien jumbos.

The rule would implement the Dodd-Frank provision to increase the APR threshold to 2.5 percentage points — from the current 1.5 percentage points.

by Diana Golobay HousingWire August 16, 2010

Fed Publishes Wave of Rules for Mortgage Origination Transparency « HousingWire