3 Ways Dodd Frank Law Will Roil Real Estate in 2014

Are you planning on buying a home in 2014? Did you know that 20% of all people who currently hold a home mortgage loan would not qualify for that same mortgage loan starting January 1st 2014.
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  • January 03 2014 - Dayton
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Answers (11)

Profile picture for Blue Nile
I checked out that "lifestyle" Lawyer's website that is supposedly claiming that Dodd/Franks is going to cause problems for people effective January 1, 2014..., apparently some news channel in Florida has her come in once a week to be questioned about one thing or another.  She was touting how good the Obama Care system would be back in October...
http://shariolefson.com/obama-care-how-it-effects-your-health-and-wallet-part-2

Then I looked at the Amazon link for that book that she is trying to sell:
http://www.amazon.com/Financial-Fresh-Start-Five-Step-Prospering/dp/0814432298

As a "summary" of the book:
"From depleted retirement accounts to underwater homes, it's been gloomy news for years. But the picture will get much brighter for those who take advantage of the laws and reforms enacted in the wake of the banking, real estate, and economic meltdown. The Dodd-Frank Act. The Making Home Affordable Program. The Consumer Financial Protection Bureau. These are just a few examples of the significant but little-understood changes that offer people an unprecedented chance to set things right with their credit, savings and investments, employment, housing, retirement and more."

So, she complains about Dodd/Frank reducing home ownership from 69% back to a more normal and reasonable 63%, but then in her book she claims how "great" Dodd/Frank is.

Why would anyone care what she thinks?  She contradicts herself, and is just an opportunist for her own personal gain.  The link for "founder" on her website doesn't even work.

Anyone thinking that she stated anything of fiscal importance is being deceived.

Perhaps, if people wanted to follow the economic impacts to the mortgage industry, they would be better off reading the thread:
"rates on the move again"?
  • January 04 2014
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Profile picture for wetdawgs

@William:   I'm still interested in the answer to the question about specific changes that borrowers have to now jump through to get approved that you disagree with.   While the concept of lenders being responsible for the choices of who they lend to is interesting, it has nothing to do with the question asked.

With the phrase  "We are suing you because you should have never allowed us to borrow this money and now we are unable to repay the loan because of your careless lending practice."   How is this different from the lawsuits related to predatory lending, or is it simply easier?

I am not disagreeing (or agreeing), simply wanting to know more.  Thanks for your answers.



@Mack:  Why is asking a question to get clarity and continue discussion "unfriendly"?
  • January 04 2014
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Profile picture for sunnyview
The ABA provided a good breakdown of the changes that Dodd Frank might bring the market in 2014. Lenders brought outside reform on themselves when they failed to make good lending choices with the governments money so this should not be a surprise.

It's a free market. The banks have the option to provide non government backed mortgages to anyone they choose at the highest rate allowed by law. Most borrowers would balk at that free market rate and most lenders don't want to assume larger long term risk without govt support so that's their call to make.
  • January 04 2014
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Welcome to the Zillow forums, William. The regulars, as you have seen, have taken over the culture here on the forums, and they are not especially agent-friendly.

I think you raise an interesting point about suing a lender for providing a defective product by not adhering to the underwriting standards. Everyone forgets that the real reason for the bubble and crash was that a couple of Wall Street sharpies figured out a scam to convince investors that high-risk paper was really safe and should go for the same price as the low risk stuff. Basically, they underpriced risk.

Now, originators are at risk at having to buy back loans that do not meet the guidelines. In the old days, those loans would have just gone into the processing plant.
  • January 04 2014
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Profile picture for Blue Nile
I see, Shari Olefson (an Attorney) just arbitrarily stated "about 20%" with no sources to back up the claim.  In other words, an "approximation" from her "experience", perhaps from the book she is trying to market for personal profit?

3 ways?  She claims:
1) 43% max DTI
2) < 3% lending fees max
3) independent verification that borrower "can" repay using standard criterion.

Nothing "new" there, that is the way it has been for about 80 years, until NAR lobbied Congress and HUD to allow mortgage loans guaranteed by the Federal Government to anyone over 18 that could sign their name.  NAR should have been sued.  It appears that it might be worth suing Shari too.   (Note, FHA was created by the National Housing Act in 1934)

Advertisements guized as news articles is not "news" at all, but paid propaganda.
  • January 03 2014
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WetDawgs in response to your question, I read a little further online this afternoon before answering your question, I wanted to ensure that I came with accurate information. The new regulations (Dodd Frank Law) now opens up the possibility that homeowners can sue the mortgage companies if they somehow find themselves in a tough situation throughout the period of the loan and unable to pay their mortgage.

The homeowner will now have the legal right to come back on the mortgage companies and say "We are suing you because you should have never allowed us to borrow this money and now we are unable to repay the loan because of your careless lending practice."
  • January 03 2014
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I cited my source and Zillow removed the link. Please Google "3 Ways Dodd Frank Law Will Roil Real Estate in 2014" to see the cited source and where they came up with the 20%. This post was not meant to be an argumentative piece, rather just a topic that I read on Yahoo Business Daily.
  • January 03 2014
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Profile picture for wetdawgs
I didn't see a response to my question "Are there hoops people will now have to jump through that you (as an agent)  disagree with?"   ... just a general grumble without examples.
  • January 03 2014
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Profile picture for Blue Nile
You can only fit so many amenities in a limited space.  And if one's family size expands?  You propose give away 15% or more of the total value in order to transition?

Right sizing is always important, but even more important is good forecasting for future probable possibilities.

Some of the lending changes coming in the next few months is just Fannie and Freddie risk adjustments, that will raise rates by more than 1/2%.

But really, there were a lot more home owners 4 years ago that wouldn't qualify for their present mortgage, simply due to a market bubble created by NAR lobbying of Congress & HUD, and Realtor propaganda stating they would never lose money on Real Estate.

And for those that have 9% annual or more interest rates on their mortgages presently?  Why would they want to "qualify" for those mortgages now, when rates are quite a bit lower?

And where did that 20% number come from?  That doesn't seem to be the same number Zillow publishes on their pages about the distressed home market.  Do you have documentation?  That is not a number published by the U.S. Census Bureau.
  • January 03 2014
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I think there are many people out there that are able to purchase a home but are unable to do so because of the new regulations. I have always been a huge proponent of buying what you can afford and not over extending just to keep up with the "Jones." I think the future of home sales in the United States will be smaller home purchases and then adding all the custom amenities a person could want.
  • January 03 2014
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Profile picture for wetdawgs
Three ways?  

Perhaps it is a good thing that less people are qualified and the rules are getting stricter.      Are there hoops people will now have to jump through that you (as an agent)  disagree with?

  • January 03 2014
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