Reflecting a decision to become more proactive in the legislative and regulatory arena, the National Association of Mortgage Brokers last week outlined an ambitious policy agenda that it says is aligned with consumers' needs.

"Mortgage brokers work in the front-line" of the lending process, NAMB President Harry Dinham said in a telephone press conference outlining its agenda for 2007. "We firmly believe our issues and consumer issues go hand-in-hand."

Because of its numbers -- NAMB has about 25,000 members (vs. about 2,200-member companies of the Mortgage Bankers Association) and brokers originate at least half of all residential mortgages -- the organization has lots of lobbying power at the state level as well as with federal lawmakers.

The group's plan targets abusive lending practices on several fronts. Among other things, it calls for:

• A mandatory disclosure sheet at both application and closing that reveals possible payment and interest rate changes.

• Restricting the use of pre-screened mortgage lists to written solicitations only.

• A good-faith estimate of closing costs that matches the numbers and titles of the HUD-1 statement that borrowers receive at settlement.

• Protections against builder and real estate broker-owned mortgage operations that offer incentives only to borrowers who use their services.

The NAMB also said it is embracing the Bush Administration's proposal to reform the Federal Housing Administration, bipartisan efforts to improve the oversight and regulation of Fannie Mae and Freddie Mac, and legislation that would allow the Department of Veterans Affairs to guarantee home equity conversion loans to eligible veterans.

Joseph Falk, a former NAMB president and the current chair of its legislative committee, said that while his group's policy agenda is wide-ranging, no one issue takes priority. "Each is important, each is critical," the former broker from Miami said. "Each has no higher standing than the other."

As far as a new disclosure form is concerned, Falk said that current requirements are largely inadequate and do not do enough to protect consumers.

In their stead, the NAMB wants disclosure on an individual loan basis that outlines minimum and maximum payment amounts, indexes, margins, caps, pre-payment penalties and, if appropriate, how negative amortization would work.

At the same time, however, the group believes borrowers should be the final decision makers.

"Consumers shouldn't be relieved of the ultimate responsibility" of picking one loan product over another, said Falk, who also expressed NAMB's skepticism of "any suitability standard that may take away that right."

The group also vowed to continue fighting for minimum pre-licensing and continuing education standards as well as complete background checks for all mortgage originators, not just brokers.

With many funding lenders acting as originators, either is some instances or in all, and with the further blurring of the various distribution channels, all lenders should play by the same rules, the group maintains.

"We're not in favor of a broker-only registry," Falk said. "There is a benefit only if it includes all originators who compete with one another."

Calling the sales of pre-screened mortgage leads an issue of consumer privacy, the group says they should be restricted because those who buy the so-called "trigger lists" cannot make a "firm offer of credit" as required under the Fair Credit Reporting Act.

Falk said that "within hours" of having their credit reports pulled, consumers are receive "dozens of harassing inquiries and phone calls" from other brokers and lenders who often misrepresent loans terms, engage in bait-and-switch tactics or, in some instances, use information contained on credit reports to steal the applicant's identity.

The former NAMB president said some members "do not appreciate" the group's position on trigger lists, but the leadership decided "the practice is wrong."

"It's not an effort to restrict competition," he said. "We see it as a consumer protection issue."

The NAMB favors restricting the sales of trigger lists to companies which make only written communications so that consumers can be educated about their rights to ask that their names and information not be sold.

But Dinham, a mortgage broker from Dallas, said the "ultimate solution" to the problem might be in allowing consumers to "opt in" in hopes of receiving better offers rather than forcing them to "opt out."

The opting-out process can take up to five days to become effective," the NAMB president said. "In that time, the consumer is left wide open to identity theft."

NAMB also wants consumer reporting agencies to stop charging consumers for re-issuing credit reports when brokers shop their applications to other lenders. Calling the extra charge "duplicative and unnecessary," the group's leaders said no additional benefit or service is rendered to justify the charge.

"It's the same information," said Falk, who noted that the group has requested a face-to-face meeting with the three major credit repositories and will be discussing these issues with them directly. On the issue of affiliated business arrangements, NAMB officials say they have numerous examples where builders have refused to sell houses to would-be buyers who don't want to use their in-house lenders or other service providers, increased their price because buyers want to go elsewhere, or conditioned incentives on the use of an affiliated or preferred provider.

And on the issue of good faith estimates, the leadership said "either all or none" to the disclosure of yield spread premiums, gain-on-sale incentives or par-plus pricing. "Disclosure should be concise, explicit and uniform for all originators," Mr. Falk. "We want enforcement to be equal as well as appropriate."

Published: February 28, 2007

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.