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HUD has drafted a new proposed rule on broker compensation and disclosures that is just beginning the review process within the administration.
House Republicans introduced legislation that would impose a temporary moratorium on class-action lawsuits seeking monetary remedies based on the alleged illegality of lender-paid fees to mortgage brokers.
The moratorium, sponsored by Rep. Robert Ehrlich of Maryland, would halt prospective class certifications in federal courts for cases involving section 8 violations of broker fee disclosures under the Real Estate Settlement Procedures Act. Ehrlich said the bill is designed to end the current litigation confusion on the legality of lender-paid fees. "It's the right thing to call a legal timeout and let HUD do the right thing in releasing a final rule on broker fee disclosure," Ehrlich told reporters at a news conference. `"This is a straightforward freeze on class certifications until December 31, 1998."
Rep. Jon Fox, R-PA, one of 18 co-sponsors of the bill, said: "This should be one of those bills that the House quickly passes under suspension of the rules because it has bipartisan support. It should get the Speaker's attention."
The Mortgage Bankers Association of America is strongly supportive of placing a moratorium on these pernicious class-action lawsuits," said Warren Lasko, MBA executive vice president. "The potential cost of tens of billions of dollars to the industry from classaction lawsuits only adds...