March 21st, 2011 3:14 PM

On April 1st mortgage loan origination for the advisor and consumer will be fundamentally changed. The Federal Reserve issued a new rule on loan originator compensation as part of implementing the Frank/Dodd Financial Reform Bill.

What that means to you the consumer is that your loan originator (regardless of where they work, bank, broker, lender, etc) will have a fixed compensation for originating the loan. You will no longer have the ability to negotiate with your loan officer. Your loan officer will no longer have the ability to work for less to earn your business. Your loan officer will no longer have the ability to pay fees on your behalf. Starting April 1st, all consumers are one size. Take it or leave it.

There are many people in government policy making that believe this will protect the consumer from the "unscrupulous loan officer" who is duping the public and making a fortune on the ignorance of the consumer. While this may be true in part, what really happens like every other government intervention into private business to save the poor consumer, all will sacrifice for the few and borrowing costs will go up once again. Except this time, you can't negotiate.

So on April 1st the government has pulled the ultimate prank and determined that we're all "fools" and they must protect us. One size fits all. Isn't that nice.

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