The Dodd-Frank Wall Street Finance Bill was signed into law by Obama last month. I've spent three weeks speaking with attorneys who have picked it apart. It's a disaster!! Our government walked into our Mortgage China Shop like a drunken bull on steroids. FACT: All loans have been CLEAN within the past 18 months. When was the last time you saw a subprime loan? How about an ALT-A or No-doc? The mortgage industry needed an antibiotic, the government prescribed a lobotomy. They produced a remedy without performing a diagnosis. Having the government monitor the lending industry is as brilliant as having Rosie O'Donnell guard a dessert tray.
The bill contains over 2,319 pages of pure junk. One of the originators, Chris Dodd made the same comment about this bill as Nancy Pelosi made about the healthcare bill: '"Let's pass it and figure it out later." In a nutshell; it closes one agency and establishes 22 others. It will be the largest government agency ever created. The largest expansion of government in our history!
Friends, this bill is so toxic to mortgage financing I don't know where to begin!
* If you are a Realtor specializing in home sales under $100,000, it might be time to find new employment. This bill caps financing costs. No wholesale originator will touch a loan under $100,000. I'll explain- There is a 3% cap on closing costs. Underwriting, processing, appraisal, survey, attorney, recording, mortgage policy, tax service, flood certs, credit report, etc…no room for an origination fee. That would be fine, however the bill removes lender rebates. And forget about writing a contract where the buyer pays the owners title policy!!
* Removal of lender rebates (yield spread). No longer will "no point" loans walk the earth. This will wipe out 50% of those purchasing FHA loans. The cost of refinancining a home will double. Our economy and the consumer are the biggest losers.
* Not wanting to leave any progressive stone unturned, Dodd-Frank had the audacity to sneak a "diversity" clause into the bill. The Equal Rights Act is not enough. If HUD audits my office and discovers that all of my employees look like me, I could be heavily fined or have my banker license revoked. My hiring practice has to be based on color, nothing else!!
* The bill calls for the removal of short-term ARMS. Consumers aren't intelligent enough to make short-term financing decisions so the government will make it for you.
* Want HVCC to go away? Your wish came true! Yes, HVCC is gone. Unfortunately, the process just became more complicated. A few months ago I sent an email saying, "the devil you know is better than the devil you don't know." The government controlling appraisal management companies is the devil we don't know. Expect hell!
Want a good laugh? As I stated, this bill consists of 2,319 pages. There is not one mention of Fannie & Freddy in the entire bill. The two entities responsible for 95% of the foreclosures in this country! Not one word!! (Hence, the word "sh*t" to describe this bill!)
Chris Dodd, a personal friend of Country Wide and Barney Frank, a personal friend of Fannie Mae wrote this bill. That is akin to Charles Manson writing children's books. Or, Paris Hilton teaching our daughters about abstinence. Or, economists saying our recession is over.
Unfortunately (or I should say understandably) NAR wants nothing to do with fighting this bill. NAR is running scared. Congress is looking into capping and taxing Realtor commissions. Now is not the time to take a high profile on anything it Washington. The inmates are running the asylum.
THE GOOD NEWS...
Ironically, the bill contains many RESPA violations. Lawyers are working behind the scenes on behalf of the National Association of Mortgage Brokers and Bankers. I'll keep you posted as things develop.
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