Tag Archives: Dodd-Frank Reform Act

As the Dodd-Frank Wall Street Reform and Consumer Protection Act reached its half-year mark, an analysis of the landmark legislation by Ernst & Young reveals that early mobilization will become more critical as rule-making activity moves toward the one-year anniversary - when many final rules are put in place. The firm's study indicates that financial firms are at different stages in their responses to Dodd-Frank. Many of the largest are conducting impact assessments and creating roadmaps and governance structures to guide compliance efforts.

The passing of the Dodd-Frank Reform Act last summer was hailed as the end of ""too-big-to-fail"" and the end of corporate bailouts. But in a report to be presented to Congress Wednesday, Neil Barofsky, head of the group charged with overseeing the government's handling of the Troubled Asset Relief Program (TARP) says the ""too-big-to-fail"" problem has not been solved; in fact, it's gotten worse, thanks to implicit guarantees that came with the massive bailouts of companies such as Citigroup, AIG, and Bank of America.

Fairway Independent Mortgage Corporation, a Wisconsin-headquartered mortgage banker, reached $3.94 billion in mortgage volume last year, its highest annual volume in the company's 15-year history. The total exceeds 2009's record volume of $3.35 billion. The company says its focus in 2011 is recruitment. It currently has more than 1,030 employees in 90 locations.

For decades the GSEs have made it possible for many people to achieve their homeownership goals by reducing the cost of credit and making it more readily available. But in light of the recent financial meltdown, banks and other corporations are calling for reform that they say the Dodd-Frank Act didn't cover. The government is set to release a report on the future of Fannie and Freddie in the coming weeks, but market participants have low expectations for a definitive solution in the report.

The task force assembled by federal banking regulators to investigate the industry's servicing and foreclosure practices after the robo-signing scandal broke is expected to release the results of its findings as early as February. John Walsh, acting head of the Office of the Comptroller of the Currency, says on-site reviews by task force examiners are ""largely complete"" and federal agencies have begun the next phase of formulating actions that should be taken to ""fix problems in the mortgage servicing and foreclosure area.""

As the backlog of foreclosures continues to drive down housing prices, losses on private-label residential mortgage backed securities (RMBS) will increase in 2011, according to Moody's. The forecast for more red ink seeping from home loans sold to investors comes despite the fact that the agency believes the rate at which loans become delinquent will decline during the year. Moody's expects flaws in foreclosure practices that have recently come to light to delay foreclosures by three to six months, further extending the window of losses for investors.

Reports have surfaced that the FDIC is contemplating stricter requirements that would force banks to disclose what potential ramifications a loan modification on a first lien they service would have on an underlying lien. Industry analysts have speculated that servicers may be reluctant to modify a primary loan because the bank that services the loan also holds the second lien. Such an arrangement could be considered a conflict of interest and prompts some to wonder if investors would be swayed if they knew of the arrangement beforehand.

The Federal Reserve announced Monday that it has named 10 new members to its Consumer Advisory Council and designated a new chair and vice chair for 2011. The council advises the Federal Reserve board on the exercise of its responsibilities under the Consumer Credit Protection Act and on other matters in the area of consumer financial services. Jim Park, CEO of the REO disposition firm New Vista Asset Management, has been selected to chair the council.

Sen. Bob Casey says money that has been earmarked to help homeowners who've lost their jobs stave off foreclosure is overdue in being distributed. Casey has sent a letter to HUD Secretary Shaun Donovan, urging him to release $1 billion in funds Congress authorized last year for HUD to implement the Emergency Homeowners Loan Program for the unemployed. Casey says the promised funds still have not reached those families who are struggling to make their mortgage payments.

Members of the 112th Congress were sworn in just days ago, and already lawmakers are making big waves. Rep. Michele Bachmann introduced legislation Thursday to repeal the Dodd-Frank financial reform bill that calls for the creation of the Consumer Financial Protection Bureau to set tighter regulations for mortgage lending and servicing, and outlines new secondary market rules intended to curb risk-taking by mortgage lenders. Congressman Barney Frank rebuked Bachmann's move as a return to the days of irresponsible and over-leveraged lending.