The Disappearing (Dodd-Frank) Act
There is a new president in town. Although everyone has different thoughts on his style and views, one thing can be agreed… he has been busy. His executive orders have been creating quite a storm causing some to cheer and others to protest. For real estate professionals and property owners, there are two executive orders that will directly effect you.
In 2008, we all witnessed (and most homeowners experienced) the effects of the housing bubble and the subsequent recession. The risky investment in mortgage backed securities and the government’s subsequent bailout of banks led to the creation of the Dodd-Frank Act. This act was created to provide oversight and regulation to the industry that was blamed for causing the crisis. Its main goal was to protect the consumer and keep banks solvent. Because of its many rules, its effectiveness has been in question since its creation with most detractors arguing it impedes qualified people from getting loans.
In February, Trump signed two orders relating to the Act. The first one asking the Secretary of the Treasury to review regulations on banks specifically in regards to their ability to make speculative investments. The second asked the Secretary of Labor to delay a rule requiring financial advisers to act in a client’s best interests.
Below are links to articles explaining the views of both sides but you are probably asking “how does it effect me a homeowner and investor?”.
Possible effects on the real estate market include:
– It may loosen mortgage requirements making it easier for consumers to take out a loan.
– It may shorter closing times when buying property due to less required documentation.
– It may decrease the closing costs for banks (and consumers) due to less regulation.
– It may increase mortgage delinquencies due to consumers being approved who cannot afford it.
– It may allow big banks to get involved in risky mortgage-backed securities again that would give Wall Street more power to impact the housing market – positively or negatively.
No matter your viewpoint on the orders, the regulations will impact the housing market. We will have to see whether it will be for better or for worse.
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Dodd-Frank changes could shuffle real estate rules
- Trump Begins to Chip Away at Banking Regulations
- What Would Repealing Dodd-Frank Mean for Stocks?
- Dodd-Frank isn’t the only financial law Trump should change
- Donald Trump Aims To Wave Goodbye To The Dodd Frank Act
