Monday, April 24, 2006

ACORN: Tell us what brokers earn

Consumer groups are not going to let HUD off the hook easily, according to a story by Brian Collins in last week's National Mortgage News.

"Consumer groups are reminding the Department of Housing and Urban Development that RESPA reform also means regulating mortgage broker compensation so consumers know up front how much they are paying the broker in a loan transaction."
Really? I'm not suggesting Brian got the story wrong. I've never known him to do that. But, I didn't know that the Real Estate Settlement Procedures Act was about regulating what the professionals involved in the transaction earned. In fact, I'm sure it's not, but I can see why these radical groups would like current HUD leadership to think that it was.

YSPs are not kickbacks, unless you assume that it's just as easy to write a plain-vanilla conforming loan as it is to write a subprime loan. My understanding is that RESPA demands that you earn your fees. Non-conforming lenders do that.

Now, should consumers know how much they're paying for a loan? Sure. TILA requires it. Should they have the information to compare different loan programs from different lenders or brokers? Sure. The HUD-1 is supposed to provide it, which is why RESPA reform is important. Does that mean that RESPA (or any law) should regulate what brokers earn? Only a person paid to peddle influence would even suggest it.

Speaking of which: I went to ACORN's website to find out what its executives earn. I couldn't find any information on the site. Interesting. It's probably there, though. Anyone who cares so much about disclosing what people earn would surely be taking their own medicine. Right?

Feel free to tell me if you think I'm off base. E-mail me if you want your comments posted to this blog.