Hope This Doesn't Create Any Problems: How the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Is Going to Impact the Mortgage Origination Industry

By Levonick, John | Mortgage Banking, January 2011 | Go to article overview

Hope This Doesn't Create Any Problems: How the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Is Going to Impact the Mortgage Origination Industry


Levonick, John, Mortgage Banking


What does the Dodd-Frank Wall Street Reform and Consumer Protection Act really mean? The crux of the legislation reads like this: Welcome to the world of the "qualified mortgage"--more lending requirements, more risk to originators, less origination revenue. * There are many rules imposed by Dodd-Frank that originators are going to have to adhere to, not only as it pertains to their regulated-entity status under the Consumer Financial Protection Bureau (CFPB), but to their investors as well. This new Dodd-Frank Act is going to require originators to have origination and underwriting processes and products locked down and will require additional paperwork to move with the loan into the secondary market. * There will be much confusion in the industry with the absence of clear and definitive regulations, and most speculate this clarity won't come for months--maybe years. * Until the secondary market gets comfortable with the exact requirements placed upon the lenders and the application of assignee liability, the liquidity in the primary market will be extremely limited, and access to credit will be equally as limited. The following changes pose the most significant impact on how mortgage originators will be required to conduct operations in the future.

What is the CFPB and what authority does it have?

For those complaining about how this act has resulted in more government, the most glaring example of this is the CFPB. The CFPB is the newly minted regulatory and supervisory authority established to examine and enforce consumer-protection regulations that relate to all mortgage-related businesses, large non-bank financial companies, and banks and credit unions with greater than $10 billion in assets.

The CFPB is now the primary regulator for non-depository lenders. Excluded from CFPB oversight authority are real estate brokers, people regulated by state insurance regulators, auto dealers, accountants and tax-preparation service providers.

The CFPB will be led by a director who will be appointed by the president and confirmed by the Senate. The CFPB will consist of specific offices that will focus on fair lending, equal opportunity, financial education and consumer protection for military personnel and older Americans.

On Sept. 20, the Treasury Department announced that July 21, 2011, will be the "designated transfer date" on which the consumer financial protection functions will be transferred to the CFPB, effectively establishing the timeline for implementing the Dodd-Frank Act's mortgage reforms contained in Title XIV. As of July 21, 2011, the CFPB shall, among other grants of authority, receive its full authority to prescribe rules or issue orders pursuant to any federal consumer financial law, receive staff transfers from the other agencies and officially become responsible for the supervision of depository institutions with assets in excess of $10 billion.

For Title XIV provisions where regulations are required to implement the specific provision, the board or CFPB must issue its final rules by Jan. 21, 2013. The rules must take effect within one year of issuance, meaning that compliance with all rules would be required by Jan. 21, 2014, at the latest.

If the agencies fail to issue implementing regulations, the statutory language will take effect on Jan. 21, 2013. Prior to July 21, 2011, the CFPB will begin conducting research on consumer financial products and services. It will begin to develop its nationwide consumer complaint-response center and begin to plan implementation of its risk-based supervision of non-depository-covered institutions.

Enhancements to origination practices

What does all this mean for the originator? The traditional loan origination process itself is going to go through significant change. What do I mean? Operational and organizational enhancements will be required of mortgage originators to ensure that the Dodd-Frank Act requirements are met. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Hope This Doesn't Create Any Problems: How the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 Is Going to Impact the Mortgage Origination Industry
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.