Tag Archives: Dodd-Frank Reform Act

The Consumer Financial Protection Bureau (CFPB) is looking to propose a rule to standardize monthly mortgage statements to make them easier for customers to understand. The CFPB recently released an early draft of a statement and is seeking feedback. Once a refined prototype is available, the CFPB said it will propose a rule to specify what needs to be on statements, but creditors, assignees, and servicers will have some flexibility to tweak the form after final publication of the rule.

Americans have lost $7 trillion in home equity in the past five years, and nearly 12 million homeowners are currently underwater. The Progressive Policy Institute says these issues deserve just as much attention in the upcoming presidential election as the issue of unemployment, and in a January report, the institute offers a few suggestions to improve the housing market and ultimately, the economy at large, including shared appreciation mortgages and down payment savings accounts for first-time buyers.

We are five years through a 10-year adjustment process, Fannie Mae's chief economist Doug Duncan told attendees at the Five Star MPact Mortgage Banking Conference and Expo Tuesday morning. Dodd-Frank has 300 rules that must be implemented in the market. Regulators are only halfway through that list so far; the second half will be enacted over the next couple of years. While the market will recover, Duncan stressed that it will take time to adjust to new regulations.

While the government has recently enhanced its efforts to fight mortgage modification scams, mortgage fraud remains a prevalent issue throughout the industry. According to Jenny Brawley, associate director of mortgage fraud investigations for Freddie Mac, three elements drive mortgage fraud schemes: pressure, opportunity, and rationalization. The FBI characterizes mortgage fraud schemes as ""particularly resilient"" and credits them with being able to adapt to economic changes and modifications in lending practices.

Rep. Scott Garrett, chairman of the House subcommittee responsible for matters related to the nation's two largest mortgage financiers, says Fannie Mae and Freddie Mac are not only systemically dangerous to economic security, but their government-sanctioned structure is ""un-American."" Garrett has unveiled his plan for putting housing finance reform on the fast track by ensuring private investors are ready to take up the slack from the GSEs. The sheer dominance of the two companies, however, leads some in the industry to err on the side of caution.

Republican members of the House Financial Services Committee point to the GSEs and the Obama administration's housing programs as areas for Congress' deficit reduction super-committee to examine as it works toward cutting $1.5 trillion of the nation's debt. A letter drafted by Chairman Spencer Bachus and signed by 20 Republican committee members first calls for an increase in the GSEs' guarantee fees and then the elimination of such programs as HAMP and HUD's Neighborhood Stabilization Program.

Speaking on behalf of the Financial Stability Oversight Council, Treasury Secretary Timothy Geithner made recommendations before the Senate Banking Committee on reforming the housing finance system. Specifically, Geithner called for establishing national standards for mortgage servicers, which the committee believes will ""realign incentives and help reestablish confidence in the integrity of the housing market."" Geithner also stressed the importance of reducing the government's role in the housing market.

At a congressional hearing Wednesday, witnesses voiced concerns about the government's participation in the mortgage market as well as the lack of transparency between servicers and investors. One analyst described the U.S. housing finance system, where the GSEs account for over 90 percent of new mortgages, as ""problematic."" Others said government is crowding out the private market with programs that make below-market-rate loans available to nearly all borrowers, and they advocated for the expiration of increased conforming loan limits.

Sen. Al Franken of Minnesota continues to express concerns that the new rules regarding ratings agencies are not addressing fundamental issues with ratings procedures. Franken, along with other congressmen and policymakers, believes ratings agencies inflated assessments of mortgage-backed securities and that these inflated ratings ultimately led to the financial crisis. During a conference call hosted by Americans for Financial Reform, Franken and others spoke out on the inherent conflict of interest they see within ratings procedures.

HUD and NeighborWorks have extended the deadline for homeowners who have experienced a loss of income to apply for the Emergency Homeowners' Loan Program (EHLP). The new deadline is Wednesday, July 27. The cut-off date had originally been set for Friday, July 22. EHLP assists homeowners who are at risk of foreclosure due to involuntary unemployment or underemployment as a result of the economy or a medical condition. Qualifying homeowners are awarded an interest free loan to pay a portion of their monthly mortgage for up to two years.