DODD-FRANK, UNDER THE GUN!

7 Replies

This is not a political thread! However, Dodd-Frank is under the gun with changes (pulling teeth) from the Act under the proposed government funding Bill.

The attack seems to be where you'd expect it to be, provisions were written by CITIGROUP  pulling the teeth on allowing the 4 big banks (that have 92% of the business at risk) dealing in securities allowing depository coverage, meaning the tax payer will be back on the hook as they were before the DF Act.

IMO, a bad idea, but not a political view, but a financial one.

More changes will likely be attempted next year, we can expect that.

But, this post is to what might be changed as to what most likely won't be changed. Remember, the bank types wrote much of the DF Act. There are provisions in there that go to the benefit of the larger and even small institutions.

Mortgage brokerage laws......my opinion, not likely to be changed.

Seller financing aspects........my opinion, not likely to be changed more exemptions ???

Predatory aspects................my opinion, not likely at the dealer level

Servicing requirements.........my opinion, won't be changed in the scope of investors

I won't hold my breath on changes made at the street level, changes may be on the way for the larger profit centers at the macro level.

Will that mean loans can get back to where they were? No income document loans?

I don't think so, if I were "them" having been tagged once, I don't think I'd do it again.

What do you think?

Remember, please, no political comments as to who does what right or wrong, just the aspects up for modification and the effects. :)    

I have heard two differing opinions on how many seller finance deals you can do in one year. 

One source (On this forum) says absolutely no more than 3, with or without a Licensed Mortgage Loan Originator. 

Another trusted source says no limit, as long as you employ a Licensed Mortgage Loan Originator to write (and vet) each deal.

What is your opinion?

I was following the commentary on this earlier today on CNBC and Barney was going nuts!  From what I heard it will be specifically beneficial to smaller/regional institutions with small impact on the larger players.

Frankly I would like more clarification in total but I feel the "changes" that are coming seem very vague and even the banks don't seem to know what will really be different.

Ironic timing with Lending Club's IPO yesterday as they are often tossed into the shadow banking commentary.

Well, the provision allows big banks, the big 4 doing 92% of the derivatives to benefit on the up side, while hedging losses with insured deposits that are picked up by FDIC, they don't lose, the tax payer does as FDIC is a quasi government entity that can be funded if the FDIC reserves are at risk, which is all what went on in 08 and then stuff hit the fan.

Not much play there by small or regional banks, so I have no idea what that spin may have been.

As to exemptions, exemptions do not exist for lenders, banks, mortgage broker types. Exemptions are to homeowner's seller financing their primary residence generally and there are exemptions for small dealers. Your exemption is first based on your lending status, registered lenders, size of loan portfolios, amount of lending, amounts under servicing. Then you'll have dealers, those in the business of selling and financing consumer transactions. These are allowed under DF to be set by each state, along with all other provisions relating to individuals and dealers. States may set their own DF laws in RE transactions so long as they are in keeping with the intent of federal law.

So, depending on the state laws, we got exemptions of 1, 3, or more depending on your status.

Then, the DF Act was amended later reflecting exemptions for individuals to 3.

Frankly, I'd have to look up the current status. What I understand probably more than casual readers of financing matters is the area of loan classification, there are several aspects if a loan is really a consumer loan or commercial, and if someone is in the business of lending or selling homes with equity financed and their level of business activity or if they really are individuals that fall under those exemptions. This is more of a concern where some investor may think they are exempt and not being. Gurus are spinning letting your wife do 3, have your dog do 3, you do 3, your trust and so on, they are failing to 1. understand who the beneficiary of those transactions really are and 2. such ploys being an obvious attempt to circumvent the Act which is also stated in the Act, that any method employed to circumvent the Act will be a covered issue, in other words, the ploy will be disregarded and the Act will apply to what ever was done.

So, I'll say 3 subject to state laws. :)    

Bill you should've seen Elizabeth Warren of Massachusetts on the Rachel Maddow show, go to ElizabethWarren.com

She's fighting Citigroup louder than anybody

http://www.elizabethwarren.com

Join the Largest Real Estate Investing Community

Basic membership is free, forever.