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Just What Housing Needs is Reduced Lending?

Reblogger Charles Stallions
Real Estate Broker/Owner with Charles Stallions Real Estate Services 610125

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Original content by Joe Petrowsky NMLS # 6869

 

“Just What Housing Needs is Reduced Lending?”

 

During one of the Presidential debates, Mitt Romney spoke a couple of different times about Dodd-Frank and over regulations as a result of this act. The damage continues to be done and all of the regulations haven’t even been written.

 

Over regulation with the current administrationThe sooner that Dodd-Frank is repealed, the sooner that the burden of over regulations can improve mortgage lending, housing and employment in this country.

 

 

 

Proposed Mortgage Rules Could Reduce Lending by 20%

 

By: The NicheReport

 

 

Mortgage lending costs in the United States could increase in 2013, prompting lenders to pass on the burden to borrowers and hampering the nascent housing recovery. Such are the observations published in a report by the American Action Forum (AAF), a think-tank based in Washington, D.C. The report is titled Regulatory Reform and Housing Finance: Putting the “Cost” Back in Benefit-Cost.

 

The AAF report looks at three factors that go beyond the definition of a qualified mortgage under the Dodd-Frank mortgage rules that could potentially go into effect next year. These factors include the Basel III agreement on capital standards for banks, mortgage underwriting and securitization. Should these go into effect, the report estimates that mortgage lending activity could be reduced by as much as 20 percent.

 

Looking Back to 2001

 

The report uses the year 2001 as the baseline point of reference for the study, and establishes projection for the three years. The impact to Gross Domestic Product (GDP) would be 1.1 percent, and the number of new constructions would drop by at least one million. The lending standards adopted by mortgage lenders since Dodd-Frank passed in 2010 are already very strict compared to 2001. The report explains that mortgage originations would be directly affected by the new rules.

 

The qualified mortgage issue has been conspicuously absent from the electoral campaigns of the presidential hopefuls. Former Governor Mitt Romney lightly touched on the matter during the first presidential debate, which happened to be his shining moment of his campaign. What actually constitutes a qualified mortgage is in the hands of the Consumer Finance Protection Bureau (CFPB), and the proposed rulemaking is still being reviewed.

 

The AAF president, Douglas Holtz-Eakin, expressed his surprise at the lack of attention by legislators to the proposed rules. His view is not being shared by other think-tanks. The Center for American Progress was quoted in the Wall Street Journal as being more optimistic with regard to the potential qualified mortgage rulemaking. This view supports the idea of consumer protection regulations eventually leading to increased mortgage lending and, more importantly, preventing another housing bubble.

image: Damian Brandon/freedigitalphotos.net

 

Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Charles, although I am not a mortgage specialist by any means, I consider myself much more "up" on financing than many Realtors.  I really don't think Dodd/Frank is going anywhere... I really don't.

Also, as far as interest rates are concerned... my local Fort Worth/Dallas market gives much more value for the housing dollar, and a high degree of financing is through the FHA.  Since Obama won the election on Tuesday, the rates have actually come down a tad... and are now at 3.25% for 30 years, with 0 points and 0 origination.  Not bad at all... :)

Nov 09, 2012 01:31 PM
Winston Heverly
Coldwell Banker Access Realty - South Macon, GA
GRI, ABR, SFR, CDPE, CIAS, PA

I had a FHA loan close today, my buyer got a 3.5% rate. In my opinion nothing to do with the President, keeping the rates low, rather destroying savings returns is what the plan really is. But that is another discussion. What I wanted to comment on is the incredible costs associated to borrow the money, regardless of the amount. in my case it was only $75k.   

Nov 09, 2012 01:47 PM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Thank you for the re-blog. I don't see any less regulation for the next few years.

Nov 09, 2012 08:21 PM