Congress Passes Reform Bill - Now What?
Today the Senate passed the controversial Financial Reform Bill of 2010 with a vote of 60-39. Regardless of your political affiliation, this has and will affect all of us in the real estate industry. If your like me, I have been trying to find the final version with all the changes made between the committees and have struggled to locate it. Once I found it...its not like I could understand it! I was able to locate a few websites who summarized the outcomes as it pertains to us and thought I would pass this info along.
As we all know, it will take quite awhile for this bill to go into affect so although we are all worried now it seems as though alot of it will not affect us in the industry for at least 12 months if not longer. I guess the biggest thing to me is that we as the real estate industry really need to put this into perspective and move on with business. There is ALOT of complaining about this bill and whose fault it was....but really WHO CARES??? There isn't anything we can do now to change it so we need to just absorb it as we have all the other changes in the last 2 years and move on to focusing on the customers we can help.
Most of the changes affect Lenders and Appraisers but clearly Realtors will be affected since they all pertain to the sale of a house. Essentially it will make obtaining a loan harder and most likely increase the cost to the consumer. Some good news of the bill is that the HVCC Rule is being eliminated. This will allow the appraiser to not be cut out of the transaction by the AMC's and give the consumer the ability to take their appraisal to another lender.
Below is a summary of the portions from the NAMB website that obtain to the Real Estate Industry:
A summary of what was changed/added during Conference Committee as it pertains to the mortgage broker industry, and a form letter for you to send your Senators urging them to vote against the bill. Financial Regulatory Reform Summary
Ability to Repay Presumption
- The Federal Reserve Board, HUD, Department of Veterans' Affairs, Department of Agriculture and Rural Housing Service was given the ability, in prescribing rules on what is a "qualified mortgage," to "revise, add to, or subject from the criteria used to define qualified mortgages." This language gives the regulators more flexibility in the criteria to be used for them to write rules defining a qualified mortgage (including the 3% cap on points and fees). This is an improvement from the original language.
- The Senate accepted House's offer that Landrieu's language to exemption qualified mortgage from 5% risk retention shall be defined no broader than defined in the mortgage lending ability to repay section.
- Senator Landrieu's (D-LA) language to exempt qualified mortgage from 5% risk retention was included in the conference report which was approved by conferees.
- Language was included that the Federal Housing Finance Agency (FHFA) be within the group of regulatory agencies named to promulgate risk retention rules with respect to residential mortgages.
Points and Fees in the Ability to Repay
- A subsection within the qualified mortgage criteria for (E) "Smaller Loans" which requires the Federal Reserve to prescribe rules adjusting the criteria of the 3% points and fees in order to permit lenders that extend smaller loans to meet the requirements of the presumption. The Board shall, in prescribing such rules, consider the potential impact of such rules on rural areas and other areas where home values are lower.
- The anti-steering section included some regulatory flexibility regarding the limitation of when a consumer rolls their costs into the rate (regarding whether that consumer can pay discount points, origination points and fees).
Home Valuation Code of Conduct
- The HVCC will be sunset within 90 days of enactment of the bill.
- Language offered by Rep. Kanjorski (D-PA) was accepted that would give regulators the authority to issue rules on appraisal report portability, including regulations that ensure the portability of appraisal reports between lenders ordered by mortgage brokers.
- Language would require a study to be conducted on the HVCC and its impact on mortgage brokers, small businesses, consumers, and the industry.
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