I have been looking through the 2300+ pages in what I think is the current version of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the financial reform bill. The bill is sweeping in it reforms. The new version of the bill has increased its coverage of the mortgage lending. Most of the coverage about the Financial Reform Act has looked at non mortgage areas.

My understanding of the bill, based on reading what I think is the final version, is that changes to be made to the Truth in Lending laws will impact consumer choice about your options to pay origination fees. Whether you can pay the loan origination fee directly as a loan charge, with the interest, or a combination of both.

The bill seems also to restrict competition among mortgage originators by not treating the funding lender's service release premium as a fee, but requiring the mortgage broker to treat yield spread premium as part of the total origination fees.

This will not reduce the rates that consumers will receive, but it will change who receives the premium. And it may eventually impact small business mortgage origination companies, further impacting consumer choice.

Hurting the small business mortgage originators will leave the consumer dependent solely on banks for mortgages, without the ability inherent in the small business mortgage broker to shop pricing and terms among different lenders with one application.

The bill addresses mortgage underwriting and servicing issues. It basically will require as a matter of law, full documentation lending and will restrict choice with adjustable rate and balloon note loans, as well as loans with negative amortization.

Additionally the bill will create new regulatory authorities. The major addition will be the Bureau of Consumer Financial Protection. This is a flagship feature of the reform act and has received wide spread media coverage. The Reform act also creates a Consumer Counselling agency within HUD that has as its goal consumer education about mortgages and foreclosures.

The Act will also initiate at least 3 GAO studies that are related to mortgage lending: appraisal, impact and cause of foreclosures, and impact of underwriting standards. Likely, commissioning these studies means that more new mortgage regulation may well be coming.

These changes have really made it difficult for the mortgage industry to stabilize and to work for an improving housing market. It would be good if new regulation for the mortgage industry could be delayed until  the industry and the market determines the impact of changes already in force from new RESPA regulations, the Federal Reserve Final Rule, SAFE Act, and HERA.

The bill has passed the House and is expected to go before the Senate in the next few days after Congress reconvenes on July 12.

Consumers and industry professionals have a couple days to express opinions to their Senators and Representatives. Here is a link to help you contact your elected representative. 

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com