The Dodd-Frank financial reform bill is a beast. At more than 2,000 pages in length, it is an omnibus bill. And much of it was written with the mortgage business in mind.
Jack Konyk, executive director of government affairs for the Washington law firm Weiner Brodsky Sidman Kider PC, gave a very informative brief on the act at the recent Regional Conference of Mortgage Brokers in Atlantic City, N.J.
One thing he made clear is that while mortgage firms may be staring down the barrel of the new law, it will take a while to implement.
The new Consumer Financial Protection Bureau, for instance, was activated on July 11, but the bureau has to now write between 150 and 330 sets of rules implementing provisions of the act. Assuming the rules can all be written by July 2012, firms would still have another year to comply.
That doesn’t mean anybody should ignore the bureau, which, while technically a part of the Federal Reserve Board, has enough autonomy that the Fed can’t intervene in decisions and has no power to hire or fire.
The only body that can overrule the CFPB, according to Konyk, is something called the Financial Stability Council. And even there, a two-thirds vote will be required to overrule the bureau.
The bureau can take up to 10% of the total expenses of the Fed for fiscal 2011, which means it will be funded well enough so that it won’t be a paper tiger.
And, that amount will increase to 11% of expenses in 2012 and 12% in 2013.
An interesting sideline to the bureau is who managed, by luck or guile, to be exempt from its oversight. These include real estate brokers, unless they are involved in home finance, retailers of nonfinancial products, lawyers, state insurance regulators, auto dealers, accountants and tax preparers, Konyk said.
The bureau will be in charge of enforcing more than 15 laws, including such mortgage bulwarks as RESPA, TILA, HOEPA and SAFE.
Changes to the HAMP program are in there, as well as anti-predatory lending provisions and controversial provisions for loan officer compensation.
Appraisals also will be getting some intention, even though the Home Valuation Code of Conduct is set to sunset.
And in case you thought 2,000 pages wasn’t enough, Konyk feels there will certainly be another, technical bill, just to clean up the obvious errors in the mammoth original.
