PRESS RELEASE
Posted on: April 19, 2007

Contact:
Jodi Greenblatt
(703) 342-5842

FTC Report Reveals That Too Much Information Can Lead to Bad Choices for Homebuyers
NAMB President Says Current Disclosure Forms Mislead Consumers

Washington, D.C. - April 25, 2007 - The National Association of Mortgage Brokers (NAMB) today called for changes to current mortgage disclosure forms noting that a coming U.S. Federal Trade Commission (FTC) study will reveal that present disclosure requirements can confuse homebuyers into choosing more expensive loans.

Particularly at issue is a secondary market fee called the yield spread premium or YSP, which mortgage brokers are required to disclose in closing documents. All other loan originators receive a comparable secondary market fee that is not disclosed to consumers.

The FTC's report says that consumers do benefit from clearly presented information, but that the disclosure of complex transactions, such as YSP, may confuse homebuyers and lead to poor financial judgment. NAMB has long expressed concern over the fact that brokers disclose more information about their fee structures than do direct lenders.

"We hope that this study will force lenders to disclose all of their income from the loans they process and eliminate any hidden lender fees that may harm consumers," said NAMB President Harry Dinham. "While we believe it is essential to share as much information as possible with homebuyers, most consumers suffer from information overload and are really only interested in the bottom line. They want the same information disclosures from all originators that will allow them to compare apples-to-apples no matter where they shop for a mortgage."

NAMB has already proposed to the U.S. Department of Housing and Urban Development (HUD) a revised and simplified Good Faith Estimate that focuses on four points of information: the loan amount, interest rate, monthly payment including insurance and tax, and the amount needed at closing. The Association is also proposing new disclosures to help consumers avoid "payment shock" that can occur on adjustable rate mortgages.

"If homebuyers were provided with the same information from all originators, they would be empowered to make better financial decisions. We welcome the FTC's recommendation to consumer-test all forms since this is the only way to eliminate confusion when comparing loans and at closing. We urge HUD to respond quickly to the findings in the FTC's study when the final version is released," said Dinham

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The National Association of Mortgage Brokers is the voice of the mortgage broker industry with more than 25,000 members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry, which originates over 50% of all residential loans in the United States.

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