Mr. John Bell, III Executive Director Loan Guaranty Service
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW Washington, DC 20420
RE: US Department of Veteran Affairs Loan Guarantee Service: Veteran Real Estate Agent Fee and Commission Payments
Dear Executive Director Bell,
The Mortgage Collaborative (TMC) stands as the largest independent mortgage cooperative in the nation, comprising nearly 220 lender members who collectively originate approximately 10% of the total mortgage volume in the United States. Our membership primarily consists of small to mid-sized Independent Mortgage Bankers, Community Banks, and Credit Unions.
We would like to express our support for the Department of Veterans Affairs (VA) and its crucial role in providing affordable mortgage financing solutions to our nation's veterans. While there are many benefits to the VA home loan program, it currently prohibits veterans from paying commissions to real estate agents.
As you are aware, the National Association of Realtors® (NAR) has been subject to a proposed settlement agreement aimed at resolving multiple class action lawsuits alleging antitrust law violations. If approved by the court, this agreement could shift the responsibility of covering real estate agent costs onto Veteran buyers. Should the VA continue to prohibit the veteran from paying for these expenses, Veterans may face challenges in having appropriate representation by a real estate agent during the home-buying process. This not only poses a disadvantage to any Veteran buyer but also undermines one of the core benefits associated with serving the country as a service member.
Therefore, TMC urges the VA to reconsider its guidelines and allow Veteran buyers to pay commissions for agents who will represent their interests in the transaction. If the VA deems it necessary to amend its guidelines through the rulemaking process, TMC supports the Mortgage Bankers Association’s recommendation for the release of an Interim Final Rule by the VA to ensure that veterans utilizing their VA benefits remain competitive throughout the comment period and rulemaking process.
Thank you for your partnership and for considering this guideline modification that would support veteran homeownership. Please feel free to contact me if you have any questions or need further clarification.
Sincerely,
Melissa Langdale President and COO
The Mortgage Collaborative
March 23, 2024
Secretary Marcia Fudge, Interim Secretary Adrianne Todman, and Commissioner Julia Gordon
U.S. Department of Housing and Urban Development 451 7th Street S.W., Washington, DC 20410
Re: FHA Life-of-Loan Mortgage Insurance Premium
Dear Secretary Fudge, Interim Secretary Todman, and Commissioner Gordon,
As the largest independent mortgage cooperative in the country, The Mortgage Collaborative (TMC) is comprised of nearly 220 lender members originating approximately 10% of the United States mortgage volume Our members are small to mid-sized Independent Mortgage Bankers, Community Banks, and Credit Unions.
We appreciate the US Department of Housing and Urban Development’s (HUD) announcement in Q1 2023, to reduce the mortgage insurance premiums (MIP) for all case numbers endorsed after March 20, 2023. In addition, we appreciate Secretary Marcia Fudge’s comments in January at the House Financial Services Committee hearing acknowledging that the department would consider eliminating life-of-loan mortgage insurance premium (MIP) requirements on FHA-backed mortgages. We thank you for prioritizing improvement for affordable homeownership. We are writing to encourage Interim Secretary Todman and Commissioner Gordon to support these statements.
TMC’s members have always enjoyed a productive and open engagement with the leadership at the Federal Housing Administration (FHA) and HUD. We look forward to hosting Commissioner Gordon during our Louisville conference on March 23-26. As we’ll discuss with Commissioner Gordon, below are a few concerns that the existing mortgage insurance policy creates.
• Higher Annual Percentage Rate (APR) for Consumers: FHA has helped many consumers achieve the dream of homeownership. However, the program requires MIP to be paid by the consumer upfront at closing and monthly for the life of the loan. Because FHA MIP carries over the life of the loan, FHA APRs are significantly higher than conventional loans with mortgage insurance. We believe that because FHA loans have a higher APR, it is deterring some buyers from obtaining an FHA loan. That deterrence may be holding back a segment of the market from achieving the dream of home ownership and may be holding FHA back from achieving its goal of promoting affordable, sustainable housing and mortgage solutions for consumers.
• Need to refinance to eliminate MIP: Homeowners with FHA loans issued on or after June 3, 2013, are required to refinance into a conventional loan and have a current loan–to–value ratio (LTV) of 80% or lower if they want to remove MIP. This added step of refinancing hurts consumers. They will be required to pay another round of closing costs and they may have to lock in a higher
interest rate if the market has shifted since their initial FHA loan closing. This will cost consumers thousands of extra dollars over the course of owning their home.
• Delinquency Rates: While we understand that MIP is designed to offset the risk of delinquency for FHA, February FHA data shows the Failure Rate of FHA loans steadies out after month 100. At this point, most consumers will have close to an 80-85% LTV. So, if delinquency rates aren’t increasing past this point, FHA has effectively already mitigated its delinquency risk on these loans and should no longer have a need to collect that insurance premium from consumers.
Our Request:
Due to the concerns we’ve outlined above, TMC is requesting that FHA reinstate the cancellation of MIP at the previously approved LTV of 78% for all purchases and streamline refinances This will ensure that FHA’s delinquency risk is offset and eliminate the burden consumers currently have when they pay MIP over the life of their loan.
As always, we thank you for your leadership and are grateful for the FHA’s consideration and support for this issue. We look forward to continuing discussions related to this and other critical matters to ensure that affordable loans are available to all qualified borrowers.
Melissa Langdale President and COO
The Mortgage Collaborative
Director Rohit Chopra
Assistant Director, Mortgage Markets, Mark McArdle
Consumer Financial Protection Bureau
1700 G St. NW Washington, DC 20552
Re: CFPB ‘Junk Fees’
Dear Director Rohit Chopra and Assistant Director, Mark McArdle,
April 25, 2024
As the largest independent mortgage cooperative in the country, The Mortgage Collaborative (TMC) is comprised of nearly 220 lender members originating approximately 10% of the United States mortgage volume. Our members are small to mid-sized Independent Mortgage Bankers, Community Banks, and Credit Unions.
TMC’s members have always enjoyed a productive and open engagement with the leadership at the Consumer Financial Protection Bureau (CFPB). We have greatly appreciated Director Chopra’s appearance as our keynote speaker at our Nashville conference in September of 2023; as well as the presence of Assistant Director, Mortgage Markets Mark McArdle at numerous conferences and webinars. Most recently, we discussed our concerns with the CFPB’s statement on junk fees in a closed-room conversation with Assistant Director McArdle during our Louisville conference. We hope to address the same concerns in this letter below.
We thank you for prioritizing improvements that support affordable homeownership, but our members have concerns about how the CFPB is defining the term “junk fees” in CFPB’s blog post “Junk fees are driving up housing costs. The CFPB wants to hear from you,” published on March 8, 2024.
The White House defines “junk fees” as “fees that are mandatory but not transparently disclosed to consumers.” The CFPB’s TRID rule requires lenders to transparently disclose to customers up front the cost of their mortgage. Therefore, any applicable credit report fees, title insurance fees, appraisal fees, and discount points are all clearly disclosed to consumers when they are shopping for a mortgage. The consumer should be able to see a difference in price for these items on the Loan Estimates they are receiving from multiple lenders and can therefore, make an educated decision on the best rate, closing costs, and discount points options based on their individual short-term and long-term financial objectives.
The CFPB also mentions in this publication that borrowers are required to pay for costs, but cannot pick the provider and do not benefit from the service. Credit reports and title insurance are mentioned as examples. These services provide a benefit to consumers and lenders. They are also critical to the stability and efficiency of the mortgage market and are required by state and federal regulations, FHA, VA, USDA, Fannie Mae, and Freddie Mac as a condition for loan purchase and/or insuring/guaranteeing. These are necessary fees that cannot simply be removed, as the term “junk fee” implies.
TMC members applaud your effort to support affordable solutions for home ownership, but would like to encourage the CFPB to work with other agencies on solutions that would make a greater impact to the consumer, such as solutions that would lower the cost to originate a mortgage, drive more affordable inventory and provide greater fee transparency to consumers between all states.
Sincerely,
Melissa Langdale President and COO
The Mortgage Collaborative