US mortgage brokers have called on the Obama administration and the US Congress to encourage the nation's Consumer Financial Protection Bureau to rescind its loan originator compensation rule.

The rule, introduced earlier this year to help arrest problems partially responsible for the global financial crisis, means that mortgage loan originators may no longer receive compensation based on the interest rate or other loan terms. Previously, originators could be paid higher compensation or commission, based on the level to which a rate was dialled up for a consumer.

Loan originators who receive direct compensation from a consumer are also now forbidden from receiving additional lender compensation, and originators may not 'steer' a consumer to a mortgage loan not in their best interest just to increase the level of their compensation.

The National Association of Mortgage Brokers (NAMB) has said publicly that ever since the introduction of the Federal Reserve Board-inspired measure on steering and loan compensation, consumers have experienced "a dramatic increase in costs on their mortgages".

The association said in addition, "the expenses have increased for all mortgage companies and a great impediment has been placed on the vital service of mortgage lending throughout local communities".

The NAMB argues that regulators should focus on the problems caused by products and product design, rather than loan originators, likening the situation to penalising pharmacists and doctors for prescribing and distributing pharmaceutical products later found to be damaging to health.