The Impact of Dodd-Frank on Homeownership

The minutia of regulatory/governmental involvement in banking created three years ago by the Dodd-Frank law is definitely on the President’s radar screen.  Either that or his advisors read yesterday’s blog entry.  If the blog entry somehow escaped their notice, feel free to send a copy to anyone you know in the administration because President Obama will be meeting Monday with regulators and department heads tasked with implementing Dodd-Frank.

Will this meeting result in another incidence of delayed implementation like we have seen with the Affordable Health Care Act?   Sometimes reality just won’t yield!   Government can’t do everything.  It certainly can’t do everything well.   Hopefully, Obama’s recent nod toward free market regulation of the lending industry was more than a passing fever.

Dodd-Frank has already affected mortgage lending, e.g., driving up loan costs to help pay for compliance personnel and procedures, drastically slowing mortgage loan delivery times, and raising industry paranoia on acquiring marginally risky loans in the bank’s portfolio.   But the true impact of the Dodd-Frank legacy is yet to be realized:

“Although the Dodd-Frank legislation was signed into law by Obama more than three years ago, many of the rules have yet to be completed. . . . As of July 15, the law firm Davis Polk found that a total of 279 Dodd-Frank rulemaking requirement deadlines had passed. Of those, only 38.4 percent were met with finalized rules, while a total of 61.6 percent were missed.”

Let us hope that the administration doesn’t test just how strong the camel’s back may be . . .  by the Davis Polk analysis, at least another 174 pieces of straw will be be piled on the backs of mortgage lenders.    Consumers will certainly be safer from predatory lending . . . but will there be any private lending left at all?   Or will the U.S. Government be your next mortgage company?