The Dodd-Frank leviathan is rumbling on, leaving a changed landscape in its wake. But 18 months after its passage, some aspects of the law are starting to become a little clearer, panelists at an informative session moderated by CATIC’s Rich Hogan learned at the New England Mortgage Expo.
Anthony Guarino, vice president for policy development and mortgage insurance at Genworth Financial, spoke on the evolution of the risk retention rules implemented by the law and the qualified residential mortgage (QRM) definition embedded within them. With the current QRM proposal requiring 20 percent down as well as several other strict requirements, comments from the industry on the bill have been both plentiful and unanimous on the need for a loosening of the proposed standards, he said.
Guarino warned that no matter what happens with the future of the controversial Consumer Financial Protection Board, the QRM rules will stick around and impact industry. Current D.C. "scuttlebutt" he said, was that we could see a revised proposal on QRM this summer, with the agency either slightly relaxing some of the rules – perhaps switching to a 10 percent down standard – or the agency may issue opt for a complete overhaul, issuing a new proposed rule and asking for another round of comments. In the latter case, actual implementation would be delayed further.
Panelists also discussed Dodd Frank’s impact on mortgage broker compensation – while the game of musical chairs prompted by the changes has come to a stop in the brokerage community, correspondent lenders are still coming to terms with their investors. And while the industry is unlikely to see much enforcement on the new compensation rules from state and federal regulators until second quarter of the year at the earliest, some industry solutions to the compensation puzzle, such as point banks, may turn out to be more trouble than balm.
Denny Maisano, owner of Real Estate Lending Services and a longtime Connecticut appraisal expert, reminded the audience with a grin, that in fact "a low appraisal does not automatically trigger a report to the state of Connecticut" but also that Dodd-Frank does provide avenues for lenders to provide appraisers with info. "There’s nothing in Dodd-Frank that says you can’t talk to an appraiser," said Maisano. "Any appraiser who says, ‘I can’t talk to you’ isn’t really doing his job." Hoped for further guidance on the contentious "reasonable and customary fee" rules should help lender and appraisers work together more smoothly in the coming year.
