Magazine article Mortgage Banking

Crunch Time

Magazine article Mortgage Banking

Crunch Time

Article excerpt

THE DODD-FRANK Wall Street Reform and Consumer Protection Act was signed into law by President Obama on July 21, 2010. A true behemoth, Dodd-Frank weighed in at more than 2,300 pages, with nearly 400 required rulemakings.

With that stroke of the pen, the president set off the biggest regulatory marathon since the Great Depression. Dodd-Frank is the law writ large and, more or less conceptually, encapsulates grand ideas like "banks should never be too big to fail," "markets, securities and derivatives must be more open and transparent," "consumers need a dedicated advocate," and "mortgage default risk is best managed with plain-vanilla loans made to borrowers with substantial assets and the verified ability to repay the loan."

Congress left the hardest work--ham-mering out the details--to the regulators and the public rulemaking process.

As the residential mortgage industry began to dissect a seemingly never-ending stream of proposed rules from a multitude of regulators, it quickly became apparent that the lack of regulatory coordination was leading to inconsistencies, ambiguities, unintended consequences and outright conflicts. As these issues have become apparent, industry professionals and experts from the Mortgage Bankers Association (MBA) have devoted a tremendous amount of time, energy and resources working toward resolving them. In parallel, bankers have been planning for the myriad systems, technology and operational changes that will be required to implement and comply with these laws.

And now it's crunch time.

As of Jan. 21, 2013, we will have gotten our first look at the final rules for the Qualified Mortgage (ability to repay); Home Ownership and Equity Protection Act (HOEPA)/high-cost mortgages; loan originator compensation and qualification; escrow accounts; Equal Credit Opportunity Act (ECOA) appraisal notice; appraisals for higher-risk mortgages; and servicing standards.

It will be no small feat to implement and comply with these regulations. As David Stevens, MBA's president and chief executive officer, noted in a letter to members on Jan. 4, 2013, this list represents "enough new rules and regulations to last us a lifetime."

Unfortunately, there's more to come. Much, much more.

As of Jan. 2, according to the Davis Polk & Wardwell LLP's Dodd-Frank Progress Report (, only 136 of 398 total required rulemakings have been finalized, 133 rulemakings are in progress and 129 rulemaking requirements have yet to be proposed. …

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