Loan Officer Compensation Essay Example | Topics and Well Written Essays - 1500 words

Loan Officer Compensation - Essay Example The republicans were in the opposition sector of the bill; in 2010 mid elections the republicans took control of the House. They were the ones who initiated the drive to end the bill, but unfortunately their efforts were gone wasted when most of the republicans joined the other side of the argument in May 2010, this happened when the senate passed a broadly similar bill. Four republicans changed their sides by supporting the new bill passed by the senate; only two republicans were left in the opposition side; however they could not generate enough influence to repeal the bill (New York Times) Loan Officer Compensation rule has been one of the hottest topics of debate in the real estate industry for several months. The changes were mainly designed to be in the favor of the consumer rather than the banks or financial institutions. The main opposition body of this rule consisted of the National Association of Mortgage Brokers (NAMB) and the National Association of Independent Housing Pr ofessionals (NAIHP), they first filled a stay order that was initially denied by the courts, later they their appeal helped them in granting an emergency stay but eventually it was also dissolved by the courts. The main reason why the courts rejected their appeal was the fact that they were unable to provide the courts with the appeal that was up to the standards of the courts to grant a stay order (Kraus) The new rule for the Loan Officer Compensation took effect on 1st April 2011, this rule was an amendment to the original (Reg Z). The rule was intended to limit the originators or the brokers from increasing their compensation at an expense of a disadvantage of the borrower, the primary aim was to incorporate consistency in the compensations paid to the brokers, previously the compensations were not found to be consistent between the transactions, they were dependent upon the broker’s ability to negotiate terms between the borrower and the lender, which at times resulted in a situation that was deemed to be in the favor of the broker and the lender, but not the borrower. The main reason behind the fact is that the borrowers are not always aware of the culture and customs of the borrowing industry, which left them with an obvious disadvantage. There were several problems that were highlighted by the critics of the industry that were present in the changes made by passing the new rule. The very first problem that was highlighted was the fact that the new rule would dramatically decrease the competition in the mortgage industry. It is analyzed as a change that was more favorable for the larger banks rather than the smaller banks of the industry; this was taken as a discrimination factor by the industry. An improvement factor for the whole economy is the one that will promote smaller businesses to flourish in their activities and increase their scale. The second issue that was raised by the group was a prediction that the change will bring about an increa se in the borrowing rate for the consumer in the long run as result from the decreased competition One of the biggest changes that were brought about by the new rule was the fact that the originators compensation is limited to one source only. Before the new rule took effect,