The bill, commonly referred to as H.R. 3221, permanently increases the conforming and FHA loans limits up to $625,000 in high-cost areas. It also creates a national registry for all loan originators and sets minimum standards for state licensing of mortgage bankers and brokers.

NAMB views the new registry and licensing system that will be implemented over the next two years as a major achievement. Every broker and loan officer will have a unique identifier and every brokerage firm or sole proprietor will have to maintain a log or "call report" of all the loans they close.

This new enforcement and monitoring program is designed to rid the industry of "bad actors" and improve consumer protection by requiring background investigations, testing and continuing education of state-licensed originators.But it may have other benefits as well. "We think the registry and national licensing system might actually be a boon for brokers," Mr. Howe said, particularly for brokers who want to do business in other states.

 Once a broker is listed on the system that records their licenses, experience and continuing education credits, the broker can use the system to see what states will accept their credentials. President Bush signed the housing bill on July 30 and now the states will have to update their licensing laws.

This legislative activity poses a "risk" for brokers, according to NAMB past president Joe Falk, who is concerned it gives consumers groups a chance to re-open the debate on yield spread premiums. "The fight now moves to the states," Mr. Falk said. And he pointed to two ominous signs. First, North Carolina recently passed a law that bans YSP on subprime loans. Secondly, the Conference of State Bank Supervisors issued a statement in July that defines the characteristics of subprime loans. "If you can define it, you can regulate it," Mr. Falk said. While NAMB considers it a victory that Congress steered clear of the YSP issue in passing the housing bill, one broker organization considers it a missed opportunity.

The Upfront Mortgage Brokers Association believes brokers should disclose their fee upfront so the borrower knows what they will be paying at the closing table. If the YSP paid by the lender exceeds to contractual amount, it is credited back to the borrower. "The upfront brokers' legislative policy is exactly how they conduct business," UMBA vice president Don Romano said. UMBA supported the inclusion of the National Mortgage Licensing System and Registry in the bill. "It is something that should have been done years ago. Unfortunately, everything is done on a reactive basis instead of being proactive," Mr. Romano said.

During consideration of H.R. 3221, whose formal name is the Housing and Economic Recovery Act, NAMB urged banking committee members to update the FHA requirements for brokers.Brokers currently have to meet a net worth test and undergo an annual audit by a certified public accountant. NAMB wanted to give brokers the option of posting a surety bond, which is less expensive an audit and would encourage more brokers to market FHA loans.

But the Mortgage Bankers Association, Lenders One/National Alliance of Independent Mortgage Bankers, Independent Community Bankers of America, American Bankers Association and the American Institute of Certified Public Accountants strongly opposed it. These opponents told House and Senate banking committee members there is no federal oversight of brokers. "It is critical that they continue to submit the annual audited financial statements to the FHA in order to participate in the program, and more importantly, protect the integrity of the FHA," the five trade groups said in a letter last January.

NAMB argued the provision in the House-passed FHA reform bill gives the FHA commissioner control of the number of brokers using surety bonds. And the commissioner could kick brokers out for basically any reason. Mr. Romano noted that the issuer of the security bond also is going to keep an eye on the broker. "If the bonding agency isn't happy, it is not going to keep writing the bond," said the president of Shelter Rock Mortgage Corp. in Lake Success, N.Y.

By the time Congress passed the bill it only called for a study on surety bonds. "They stayed with the annual certified audit. That aspect will keep a lot of brokers from getting into FHA," Mr. Anderson said.

NAMB vice president William Howe noted that other provisions in the bill would improve the FHA condominium and manufactured housing financing programs, which is positive. "Going forward, as the financial markets ease up, I think FHA is going to maintain a good percentage of the business," Mr. Howe said.