The National Association of Mortgage Brokers filed alawsuit against the Federal Reserve Board this month in an attempt to preventnew mortgage broker compensation regulations, which are to take effect April 1.

The trade group claims the Federal Reserve’s newrestrictions on how loan originators are compensated will cause “immediate, devastating,and irrevocable harm” and lead to the industry’s extinction. The FederalReserve created the new regulations after finding that many consumers areunaware of how loan originators are compensated and the potential conflicts ofinterest.

According to a Federal Reserve report, “consumers oftenwrongly believe that brokers have agreed or are required to obtain the bestinterest rate available.” Alys Cohen, staff attorney for the National ConsumerLaw Center, believes the new regulations are necessary to protect consumers. “Payingbrokers to charge homeowners more is one major reason why we had an epidemic ofabusive loans,” Cohen said. “Changing incentives is essential to establishing afair market.”

During the mortgage boom, unscrupulous brokers collectedlarge commissions by offering high-rate loans even when borrowers qualified forbetter terms. The new Federal Reserve regulations aim to eliminate these conflictsof interests.

If you need assistance with your mortgage, please contactthe experienced and trustworthy Maryland Mortgage Modification LawyersofChaifetz & Coyle, P.C., by calling 443-546-4608.