As I understand it, Dodd-Frank will kick in the beginning of 2014, and will drastically change the mortgage rules, and in this case this may be bad for Mortgage REITS, does anyone on this board have any understanding of this rule ??
I don't see how Dodd-Frank would affect mortgage reits especially ones that buy government backed mortgage bonds. Dodd-Frank is designed to prevent substandard mortgages like the subprime mortgages that were the catalyst for the near financial meltdown in 2008.
Dodd Frank says that a loan originator shall make a reasonable and good faith effort based on verified and documented information that “at the time the loan is consummated, the consumer has a reasonable ability to repay the loan, according to the terms, and all applicable taxes, insurance (including mortgage guarantee insurance), and other assessments.
But it doesn't say to what degree. What needs to be documented? It assumes that the loan originator will decide that. In other words they offered no guidance. I am assuming that the Democrats made it vague like this so that they could again start offering loans to poor people who could not pay them back as a way to buy votes in the future.
We all know what happens when the loan originator is left to interpret vague language. The only reason there are strict standards now is for two reasons, one, loan agencies are not accepting loans that do not meet strict lending standards, and two, the loan agencies are no longer being pressured by congress to pressure banks into making subprime loans to poor people, a type of loan the banks never wanted to make in the first place, until the agencies threatened to not buy any of their loans unless a percentage of their loans were subprime and thus forcing them to make them. Not all banks were Countrywide. Many had to be strong armed.
Obama, btw, was representing Acorn as a lawyer on this issue who was one of the PACs pressuring congress and suing banks for not making subprime loans to poor people. So when he sues banks latter for making them it is a little much. It just shows that this guy has no feelings of responsibility for the harm he was instrumental in causing. He is purely political. Everything he says or does is for political reasons.
As usual, our resident Communist gets it wrong. Had the existing laws on the books been followed, the meltdown wouldn't have happened. The govt has done everything in it's power to create banks that are too big to fail. Then they used that as the excuse for the financial meltdown. Dodd-Frank attempts to create rules to address a crisis after it happens, rather than fully prevent it ahead of time. And like Obamacare, only 155 of 398 rules required by this law are considered final. Dodd-Frank doesn't even address Freddie and Fannie, which cost taxpayers $140 billion.
The financial crisis resulted more from people speculating on increases in housing prices, and commercial and investment banks that did the same thing. Banks were told to make housing affordable to everyone. They did but they didn't hold them, instead they started packaging these garbage loans into derivatives that were sold to others and kept on the books at inflated values. Then add the Jamie Dimon rape of Bernake with the bailout of Bears Stearns and you've got your meltdown.