The National Association of Mortgage Brokers (NAMB) said the financial reform plan proposed by President Obama is flawed because it attempts to tie mortgage broker compensation to the long-term performance of securitized loans.
The proposal shifts the risk of poor underwriting from the mortgage lender to the mortgage broker "without an increase in compensation for that shift," said NAMB president Marc Savitt in a statement.
The group said it welcomes transparency and the proposed Consumer Financial Protection Agency (CFMA) would provide that and level the playing field. However, "proposals to standardize mortgage products could have serious consequences for consumers shopping to find the most suitable and cost effective loan," Savitt said.
The Center for Responsible Lending said it supports the creation of CFMA. "The same rules must apply to similar products across all financial institutions. Such consistency is only fair. And we strongly support the position that states must be free to make and enforce laws that are even stronger than those set by the federal agency when they determine that's necessary to protect their own residents," said CRL president Michael Calhoun.