� 200 Club

Summary of Federal Policy Concerns

1. Make Sure Regulators Do Not Price-Fix Origination Fees

Situation: The DODD-FRANK ACT prohibits mortgage originator compensation that varies based on the terms of the loan (other than the amount of the principal). This could be interpreted by the regulators as requiring a standard fee for all loans. Request: Ensure the DODD-FRANK ACT regulations do not require fixed loan origination prices so that mortgage originators can serve consumers with a variety of loan sizes.

Key Points:

� We are concerned that the language will be interpreted by regulators as requiring a standard fee for all loans, where a mortgage originator would be required to determine either a "flat fee" or a fixed percentage that would be both the maximum and minimum the law would allow him or her to earn for their efforts.

� A flat fee would lead to consequences that would hurt the most vulnerable in

our housing system: those buying entry level homes and requesting small loans.

� A fixed percentage would result in those receiving higher loan amounts paying an excessive premium.

� Mortgage originators must have enough flexibility to be responsive to the

uniqueness of each transaction.

� Different loans requiring different efforts should be allowed to receive different initial quotes based on difficulty of loan, length of process, and loan size.

2. Preserve Consumer Options for Payment of Origination Fees

Situation: The Federal Reserve rule on loan originator compensation and the DODD-FRANK ACT prohibit the financing of loan originator compensation if loan originators concurrently receive origination fees from the borrower. Request: Include language in the DODD-FRANK ACT "corrections" legislation to allow the payment of origination fees up front and through the interest rate as long as all such fees were fully and clearly disclosed and agreed to by the consumer earlier in the application process as defined in TILA and do not increase based on changes in the terms of the individual loan or the consumer's decision about whether to finance such fees or charges. Key Points:

� The Fed Rule and the DODD-FRANK ACT will create situations where borrowers will have severely limited financing options to meet their needs.

� Language needs to ensure that a borrower has the ability to finance closing costs as they

deem appropriate for their individual circumstances (i.e. cash available at closing, length of time planning to remain in home, refinance, etc.)

� Congress should preserve the borrowers' ability to choose low-cost and zero-point financing for their homes by financing fees and/or costs into the rate or loan amount, while protecting consumers from hidden charges or abuse.

3. Amend Ability to Repay and Safe Harbor Provisions in the DODD-FRANK ACT to Protect Borrower Options Situation: The DODD-FRANK ACT's "ability to repay" language is intended to ensure creditors follow certain underwriting guidelines when making mortgage loans. The language offers a safe harbor which, when conditions are met, grants a presumption to the creditor that these guidelines have been met. Among the conditions are maximum fee bars; if the total fees (as defined by Section 103(aa)(4) of TILA) collected exceed the bar of 3%, the presumption will not be offered. Request: Within the DODD-FRANK ACT "corrections" legislation, remove or increase the fee cap language or change what is included in the points and fees calculation to protect small loan amounts and consumers seeking non-government financing.

Key Points:

� The fee cap will harm consumers by promoting higher rate steering, reduce competition between delivery channels, and have a negative impact on lower loan amounts.

� A 3% cap will harm consumers by reducing competition between brokers and creditors, since brokers are required to include all origination paid to the company in the 3% cap while creditors are only required to include compensation paid to their loan originator.

� On smaller loans, brokers would exceed the 3%, while creditors could use the invisible "gain on sale" to retain the safe harbor.

� If creditors choose to refuse to lend without the presumption, brokers will be left with a major void in their ability to compete.

� Consumers seeking conventional financing with loan amounts below $200,000 could easily be shut out of the marketplace, unable to obtain financing.

� A better consumer result would be achieved by focusing on more appropriate ways to prove ability to repay than the fee caps.

� The more thorough underwriting standards required by this legislation are key. Ability to

repay is better reflected by actual borrower documentation than fee caps. 4. Ensure the DODD-FRANK ACT's Liability Provisions Are Fair and Do Not Invite Abuse Situation: The liability provisions for mortgage originators in DODD-FRANK ACT are overly broad, making mortgage originators liable for acts they have no control over. Request: Clarify the language in Section 1404 during the DODD-FRANK ACT "corrections" process to ensure fairness to mortgage originators and to prevent frivolous lawsuits. Key Points:

� Attorney's Fees � The current DODD-FRANK ACT language only allows attorney fees to prevailing

consumer plaintiffs but not to prevailing mortgage originator defendants. � To ensure the legitimate foundation of lawsuits brought under this clause,

attorney's fees should be available to both parties should they prevail.

� Damages � Language in Section 1404 of DODD-FRANK ACT makes a loan originator liable for

every act performed by a creditor that is regulated by Section 129B of Truth in Lending.

� The mortgage broker, who by contract is not an agent of the lender, and who has no underwriting authority or rights, including the authority to decline on behalf of the lender, would become responsible for the lender's credit decisions.

� Making a mortgage originator liable for underwriting decisions that must be made by another party or a different company (as is the case with a mortgage broker) is patently unfair.

5. Appraisal Independence Regulations - Allow Mortgage Professionals to Order Appraisals

Situation: The DODD-FRANK ACT included language directing the Federal Reserve Board to prescribe interim final regulations on appraisal independence to replace the Home Valuation Code of Conduct (HVCC). The Interim Final Regulations, released on October 18, 2010, define acts or practices that violate appraisal independence for all individuals involved in the mortgage process. While the Fed's Rule allows mortgage professionals to order appraisals, Fannie Mae and Freddie Mac's guidelines still prohibit mortgage professionals from ordering appraisals. Request: Require Fannie Mae and Freddie Mac to follow the Fed's appraisal independence Rule and allow mortgage professionals to order appraisals. Key Points:

� The DODD-FRANK ACT called for the repeal of the HVCC and directed the Federal Reserve Board to prohibit improper influence on appraisers and ensure appraisal independence in its interim regulation.

� The Fed equally applied appraisal standards to all involved in the real estate transaction

without favoring one origination channel over another.

� Fannie Mae and Freddie Mac should follow the Fed's appraisal standard and allow mortgage professionals to order appraisals.

6. Appraisal Independence Regulations - Allow for Appraisal Portability Situation: The DODD-FRANK ACT included language directing the regulators to come up with standards regarding appraisal portability. Such appraisal portability standards have not yet been promulgated. Request: Pursuant to the DODD-FRANK ACT, ask the Federal Reserve to move forward with regulations allowing for the portability of appraisal reports. Key Points:

� Regulators should allow for the portability of appraisal reports.

� Appraisal portability allows an appraisal to be used across lenders, so homebuyers can shop for the best loan without paying for additional appraisals.

� Regulators should direct lenders to accept appraisals that meet industry standards, even if ordered by another lender.