Mortgage Blog

 In a move to prevent yield spread premium abuses by loan
officers and brokers the Federal Reserve has issued a proposed
rule that would only allow mortgage origination companies to
compensate LOs and third-party professionals based on the principal
amount of the loan.

This "proposal requires the loan originator to receive the same
compensation from a particular creditor regardless of the loan's
rate or term," said Federal Reserve chairman Ben Bernanke. The
proposed amendments to the Fed's Truth in Lending Act regulations
also mandate new consumer disclosures on home purchases, refinancings,
and home equity lines of credit.

The proposal revises disclosures on the annual percentage rate
advertised to the consumer. The Fed has issued the rule for a
120-day comment period. Mr. Bernanke said his staff is working with
HUD to make the TILA and RESPA mortgage disclosures more compatible
which possibly could lead to a merger of the two disclosure rules.