Judge Temporarily Delays Start Of Mortgage Law


Federal rules were to go into effect Friday that would have changed the way mortgage brokers may make their money. The law would have banned brokers from charging higher interest rates on home loans and making commissions that way.

Copyright © 2011 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.


Mortgage brokers have been given a reprieve. Late last night a judge granted a stay, basically postponing a new law that was to take effect today banning brokers from charging higher interest rates on home loans and making commissions that way.

Scott Graf of member station WFAE in Charlotte has more.

SCOTT GRAF: The idea of the law is to prevent the predatory lending that sometimes took place during the housing boom a few years ago. Specifically, the changes aimed to do away with a lender getting paid a commission based on the terms of a loan. Right now lenders can add to their commission by signing up borrowers at higher interest rates than the homebuyer otherwise could have received.

Al Ripley is with the North Carolina Justice Center.

Mr. AL RIPLEY (North Carolina Justice Center): You had many homeowners who had good enough credit to get a good 30-year fixed mortgage but were instead steered into very harmful adjustable-rate mortgages that were simply unaffordable.

GRAF: Under the new rules from the Federal Reserve, loan officers would get commissions based only on the size of a loan. The mortgage industry, though, says the proposal goes too far.

Keith Luedeman owns Charlotte-based GoodMortgage.com. He says the changes will hurt those who can only afford small mortgages and those who don't have much savings.

Mr. KEITH LUEDEMAN (GoodMortgage.com): The fact of the matter is that extra money through a higher rate doesn't always go to pay the loan officer. Sometimes it can be used to benefit the customer by paying part of their closing costs.

GRAF: Two mortgage industry groups have been battling in court to block the changes. A hearing on their concerns is now scheduled for next Tuesday.

For NPR News, I'm Scott Graf in Charlotte.

Copyright © 2011 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.



Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.