A committee of industry experts met recently to discuss the qualified mortgage rule before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. Maybe that sounds a little scary to you because you didn’t know this was happening, but don’t let this worry you as a future home-buyer. These experts were meeting to talk about the fact that certain borrowers were being excluded from the lending system due to poorly-defined rules established in the Dodd-Frank Act, and they wanted to fix it so that everyone had a fair chance of buying a home. There needs to be a financial system for low and moderate income households. It’s the only way we can boost our economy and get back to recovery and then prosperity.
But back to why you thought this talk about the Frank-Dodd could be scary- Back in January, U.S. News and World Report put together 10 ways Dodd-Frank will hurt the economy in 2013. Now that we are in 2013, it does seem like at least some of these predictions are actually happening. Part of the issue with Dodd-Frank is due to the following reasons:
►Fees paid to affiliated (but not unaffiliated) title companies
►Amounts of homeowner’s insurance held in escrow
►Mortgage level price adjustments (LLPAs)
►Payments by lenders to correspondent banks and mortgage brokers in wholesale transactions.
These pieces of the Dodd-Frank act appear mischievous, essentially creating havoc for mortgage professions that they most certainly do not need.
Gary Thomas, president of the National Association of Realtors (NAR), testified at this Dodd-Frank meetings stating, “As a result of this problematic definition, many Mortgages made by affiliates, particularly those made to low-and moderate-income borrowers, would not qualify as QMs.” What does that means? It means that these Mortgages would be unlikely to even be made or would only be available at higher rates due to heightened liability risks.
It isn’t easy to find a supporter of the Dodd-Frank Act right now.