Tuesday, April 5, 2011

FYI: DC Cir Dissolves Stay of FRB's LO Compensation Rule

The U.S. Court of Appeals for the District of Columbia Circuit entered the attached order dissolving the administrative stay of the Board of Governors of the Federal Reserve System's ("FRB") final loan officer compensation rule. 

The Court held that the appellants did not satisfy the stringent standards required for a stay pending appeal. The Court also issued the attached scheduling order.

 
As the administrative stay is now dissolved, the FRB's final loan officer compensation rule is now in force.
 

Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois  60602
Direct:  (312) 551-9320 
Fax:  (312) 284-4751
Mobile:  (312) 493-0874
RWutscher@kw-llp.com
http://www.kw-llp.com


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________________________________

From: Ralph Wutscher [mailto:rwutscher@kahrlwutscherllp.com]
Sent: Friday, April 01, 2011 8:14 AM
To: Ralph Wutscher
Cc: socaloffice@kw-llp.com; dcoffice@kw-llp.com; Chicago Office
Subject: FYI: Implementation of FRB's LO Compensation Rule Stayed



The U.S. District Court for the District of Columbia denied the motions of the National Association of Independent Housing Professionals, Inc. ("NAIHP") and the National Association of Mortgage Brokers ("NAMB") for a temporary restraining order and preliminary injunction to enjoin the Board of Governors of the Federal Reserve System ("FRB") from implementing the loan officer compensation rule, effective on April 1, 2011, that restricts certain compensation practices of loan originators relating to mortgage loans.  A copy of the District Court's Opinion is attached.

As you may recall, in their consolidated actions against the FRB, the NAMB and NAIHP allege that the FRB exceeded its authority under the Truth in Lending Act ("TILA") and the Home Ownership and Equity Protection Act ("HOEPA") in promulgating the loan officer compensation rule.  Alternatively, the trade groups assert, if the FRB did have authority to issue the final rule, the final rule is arbitrary and capricious.

Following the denial of their requests for a TRO and preliminary injunction in the lower court, the trade groups appealed the U.S. Circuit Court of Appeals for the District of Columbia Circuit.  The trade groups also filed an emergency motion for expedited relief and emergency motion to stay implementation of final rule pending appeal.

The DC Circuit ordered that the implementation of the final rule under review in the consolidated cases be stayed pending further order of the Court, in order to provide "sufficient opportunity to consider the merits of the motions for emergency relief."  The Court specifically noted that the stay "should not be construed in any way as a ruling on the merits of those motions."  A copy of the Circuit Court's Order is also attached.

The DC Circuit set a briefing schedule on the motions.  The FRB must file a combined response to both motions by 12:00 noon, Monday, April 4, 2011.  The trade groups were allowed until 10:00 a.m., Tuesday, April 5, 2011.

Thus, implementation of the loan officer compensation rule is stayed at least until April 5, 2011.
 

Ralph T. Wutscher
Kahrl Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois  60602
Direct:  (312) 551-9320 
Fax:  (312) 284-4751
Mobile:  (312) 493-0874
RWutscher@kw-llp.com
http://www.kw-llp.com


NOTICE:  We do not send unsolicited emails.  If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention.  Thank you.

Our updates are available on the internet, in searchable format, at: http://updates.kw-llp.com