State Predatory Lending Bill:
The Proposed “Tennessee Home Protection Act” has been put on indefinite hold by the Department of Financial Institutions (DFI) due to the preemption of national banks by the Office of the Comptroller of the Currency (OCC). Commissioner Lavender has stated that he will not create an un-level playing field in Tennessee for different types of financial institutions. The OCC preemption would only exempt national banks from state laws. State banks, mortgage lenders and mortgage brokers would then operate under a different set of rules. The OCC preemption is being challenged by several states and, should it be overturned, the DFI will proceed with their legislation. Until then it will continue on hold.
Licensing and Continuing Education Bill:
As part of the proposed “Tennessee Home Protection Act” TNAMB along with our other industry partners has pushed for licensing and continuing education requirements for all originators licensed under the “Tennessee Residential Mortgage License” Law. We were in the forefront in pushing for this important piece of legislation to set up accountability for loan officers operating in Tennessee.
The DFI, although not initially in favor of licensing and continuing education, has modified their stance and the remaining piece of legislation coming from the department is in the form of registration of individual loan officers. This registration will enable the department to know where every loan officer in the state is working and will prohibit loan officers from working through more than one lender or broker. It will also enable the commissioner to levy fines up to $10,000.00 against any lender or broker found in violation of the law. The commissioner has expressed his belief that the industry needs to clean itself up by encouraging lenders and brokers to monitor their own employees through good hiring practices, which might include doing background checks. He also believes that lenders and brokers should look to educating their loan officers and monitoring their activities to be sure that they are doing business in an ethical and legal way.
The commissioner has also said that there will be tightening the scrutiny of applications for lenders and brokers in the state with a particular emphasis on financial statement review.
This legislation can be reviewed by going to: http://www.legislature.state.tn.us/bills/currentga/BILL/SB3455.pdf
HUD’s proposed rule:
HUD’s proposed rule has been forwarded to the Office of Management and Budget (OMB) for their review. This was done after Secretary of HUD Mel Martinez resigned. Many had thought that his resignation signaled the end of this ill-conceived attempt at RESPA reform. However acting HUD secretary Adolpho Jackson moved during a congressional recess after HUD had given assurances that it would not. This move angered many in congress including Representative Don Manzullo R-Ill, Chairman of the House Small Business Committee and Senator Richard Shelby R-AL, Chairman of the Senate Banking Committee.
Congressman Manzullo held a congressional hearing in early January to call HUD to task. This rule is very up in the air right now as no one knows if it is revised from the original proposed rule which generated 45,000 letters and post cards to HUD through NAMB’s lobbying effort and letter writing campaign. Congress had exerted considerable pressure on HUD to look at modification of the Rule. Congressman Manzullo has even gone so far as to say that if HUD went forward with the rule in its current form he would introduce legislation to stop implementation of the Rule.
Additionally NAMB is gearing up for a fight over the Rule if it should still include re-characterization of Yield Spread Premium (YSP) as a payment to the borrower. If this issue is still in the Rule, NAMB intends to challenge the Rule itself and is attempting to build a war chest to do so. Please consider at least a $100.00 donation to protect your business. Go to www.namb.org and find the blue rectangle titled Professional Protection Fund. Follow the directions and make your donation today. Don’t expect that someone else to do it. Do Your Part!
