Just What Housing Needs is Reduced Lending?

Mortgage and Lending with Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 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Over regulation with the current administrationThe sooner that Dodd-Frank is repealed, the sooner that the burden of over regulations can improve mortgage lending, housing and employment in this country.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


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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com



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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.

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  1. Charles Stallions 11/09/2012 01:21 PM
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Lisa Orme
The Master's Key Realty LLC -Windsor, CT - HARTFORD COUNTY - Windsor, CT
Broker/Realtor, ABR, CRS,GRI, PSCS, SFR, Notary Pu

The more I hear about the impact of Dodd-Frank regulations, the more I dislike them!  We need to simplify the regulation of our government over the housing and banking industries...


Nov 01, 2012 02:54 AM #1
Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Joe, Lending has become so cumbersome. Many of my lender friends just don't have the joy that they used to have for the job and no wonder. The rug is always being kicked out from underneath them.

Nov 01, 2012 03:17 AM #2
Eileen Hsu
Douglas Elliman Real Estate - Manhattan, NY

I always enjoy your educated perpsective on these types of issues Joe, keep them coming.

Nov 01, 2012 04:48 AM #3
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Joe, a banker friend of mine sent me an article on The Future of Lending from Florida Realtor magazine. I will email it to you. The more I know about Dodd-Frank the more I dislike it. So many unintended consequences for the American people, from the appraisal debacle to this. Can't even the people who passed it see that? What color are their glasses??


Nov 01, 2012 07:25 AM #4
David Burrows
Classic Realty - Fairfax, VA
No Pressure, Just Seriously Devoted to Real Estate

Joe - an excellent article and I agree with you about Dodd-Frank. Thanks for sharing this important information.

Nov 01, 2012 08:14 AM #5
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joe, just what we need more regulations.  When are these guys going to read that memo that more regulations are not the answer.

Nov 01, 2012 12:23 PM #6
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Joe.  Dodd Frank is such a disaster to the nation's economy.

Nov 01, 2012 09:12 PM #7
C. Lloyd McKenzie
Albuquerque, NM
Living Albuquerque

Good Evening Joe:

Thanks for sharing this excellent post.  I always look forward to reading your posts

Nov 05, 2012 12:07 PM #8
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

We may be headed to an all cash society better known as Socialism. Obama wants to help the middle class and string up the rich. Dodd Frank will do right the oposite, the rich have cash and will buy of the houses and the middle class will rent these houses and never own.

Nov 06, 2012 09:19 PM #9
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Joe, 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 01:36 PM #10
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Charles in #10:  Yeah, sure, we are headed for an "all cash society better known as Socialism."  That stilted view has gotten to be seen by so many as being only from the far right fringe.  I really don't remember very much, if any, mention of that in either Presidential campaign.

And "stringing up the rich?"  I've never seen it presented to that extreme except by those on the fringe, either.  All Obama is saying is that having things a bit more "fair" makes more sense than how things are currently.

Nov 09, 2012 01:42 PM #11
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