Our current federal administration promises to decrease government regulatory burdens on businesses. About seven years ago my mortgage lending industry was hit hard by the just created thousand plus page Dodd-Frank laws. Recently my clients have asked me how the promises of decreased regulation will affect my mortgage lending industry and I thought it would be helpful if I shared my response with all of you. Yes my industry is heavily regulated and you would benefit by a sensible weeding out of useless regulation. At the same time, I am convicted and strongly support most of my industry regulations.
Have you recently applied for a loan? The initial disclosure process went from 9 pages to 85 pages when Dodd-Frank was enacted. A burdensome insanity at best and I am certain the effects of so much paperwork have not provided the results that our law makers intended. We are over disclosed. Did you know there are single page disclosures that their sole purpose is 1) Acknowledge the right to receive a copy of the appraisal, or, 2) Confirm your intent to proceed with the loan, or 3) Acknowledge that you are aware of the Patriot Act (like you have not been to an airport lately?), or 4) Acknowledging that you have received a copy of your credit score… Individually, each one of these acknowledgements has merit. However, put together 80 pages of these silly acknowledgements and the intentions become muted into a blur of “sign and date here” paperwork. Sorry, but my industry confuses when its true intent is to disclose.
Some of the recently employed Closing Disclosure, CD, and Loan Estimate, LE, Dodd-Frank forms where very well done. The CD replaced the HUD Settlement statement that one gets at the closing of a real estate finance transaction. These forms are laid out and provide a clear breakdown of the finance transaction costs. Most importantly, the LE, which is provided at the beginning of the finance transaction, is laid out so that line item by line item it compares directly with the CD – refreshing and helpful change for your next mortgage.
Regulatory enforcements have changed for the better the way my industry does business. Underwriters now underwrite loans. This was not the case prior to 2008 and all of us suffered. The current mortgage process is “hard work” for both borrowers and underwriters. This “hard work” assures real, not fraudulent, borrower incomes. Underwriting based on real incomes produce a real, not fraudulent, housing market. My hope is that we continue the “hard work” to insure a better housing market for all of us.
The enactment of Dodd-Frank was voluminous and systemic – becoming a large part of everyday mortgage lending process. Can or should the Dodd-Frank law be repealed? The wholesale repeal of Dodd-Frank in the mortgage industry would be disruptive. A viable alternative is to look at, over time, modifications of the Dodd-Frank law that could produce “make sense” simplifications of this behemoth regulatory law. Whatever the future changes, I would like to see consistent and continued enforcement of mortgage regulations – thus insuring the stabilization of your home values.