Dodd-Frank Act Threatens Delays in Homeownership
The impact of the recently implemented Dodd-Frank Act was discussed yesterday at the Realtors Midyear Legislative Meetings and Trade Expo. Before the housing market crashed, lenders were undoubtedly granting loans to millions of Americans who were not qualified to own a home. So in an effort to clean up the mess, the government has done a little regulating. Many would argue they’ve done too much regulating.
Sure, lenders need to reform by lending only to responsible borrowers. However, if restrictions are too harsh, even creditworthy borrowers will suffer. A proposed rule included in the Dodd-Frank Act (signed into law last July) requires an 80 percent loan-t0-value, which would require borrowers to put 20 percent down, or otherwise opt for higher fees and interest rates. According to research conducted by the NAR, “it would take 14 years for a typical person to save up a 20 percent down payment to buy a median-priced home”. The new qualified residential requirements (QRMs), will not only effect those who wish to buy a home, but also sellers, loan officers, and mortgage originators. Logically, if those wishing to buy a home are having a hard time obtaining a loan, sellers will get less offers and have to wait longer to close the deal.
NAR President Ron Phipps ensures, “realtors are working hard to make sure that this doesn’t happen, and that those creditworthy buyers who are able and willing to assume the responsibilities of owning a home can continue to achieve their home ownership dreams”.
The US Senate also discussed the Dodd-Frank Act yesterday. However, a report from law firm Davis Polk states that only 5.4% of the rules included in the act have been finalized. Ben Bernanke , a chairman of the Federal Reserve, states in able “to meet the January 2012 implementation deadline for these enhanced standards, we anticipate putting out a package of proposed rules for comment this summer”.
Courtesy of NAR, International Business Times, and efinancialnews.com
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