For the past several months, pending changes to loan officer compensation have been one of the hottest topics in the real estate industry.  The much-maligned changes, which are intended to prevent loan officers from steering borrowers into loans that are not in their best interest were allowed to proceed by the courts today.

Two industry groups, the National Association of Mortgage Brokers (NAMB) and the National Association of Independent Housing Professionals (NAIHP) filed motions for a temporary restraining order against the Federal Reserve to prevent the rule from taking effect. Initially the motion was denied, but an emergency stay was granted on appeal. Yesterday the stay was dissolved by the Appellate Court.  The court ruled that the industry groups did not satisfy the stringent standards required for a stay pending appeal.  (Edit: originally I thought this matter involved a hearing, but a helpful reader with more legal acumen than I pointed out that there was no oral hearing my mistake.)

Critics of the changes contend that the new rules will decrease competition in the mortgage sector, increase consolidation, and raise the cost of financing for borrowers. Additionally, many felt that the rules favored large banks over small originators.  Members of the House Financial Services Committee as well as some Senators urged the Federal Reserve to wait to promulgate the rule.

Changes to loan officer compensation (which were originally scheduled for April 1st) will take effect this morning.  If youre in the mortgage industry, Id like to know what you think about the changes.  Let me know in the comments section below.

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