By the time you read this, the new 2,300 page financial reform bill is likely to be making the headlines. The Senate has already approved the new bill and President Obama is expected to sign it into law this week – despite the fact that many of the provisions related to specific regulations have yet to even be written. If that sounds faintly disturbing, don't worry, your concern is noted and shared by many experts throughout the nation. However, there are sweeping changes that are already apparent despite the lack of specific details.
Although broad in scope, home buyers and sellers are likely to be among the first impacted by the new provisions. They represent one of the most comprehensive – top to bottom changes to the finance, valuation, types of mortgage products offered and how lenders are compensated to take place in decades. In fact, there are even new rules for real estate investors that provide capital for the purchase of mortgages.
A few of the most important points likely to make immense impact to buyers, sellers and investors is the language dealing with any type of mortgage outside of the "traditional" or "plain vanilla" category. Unfortunately, regulators have yet to fully define what will constitute a "traditional" mortgage under the new plan but it is clear that the line will be drawn to reduce the number of sub-prime borrowers as well as offerings of owner finance and other alternative forms of finance. Experts predict an immediate and severe impact on many minority and low-income borrowers; many who have already been impacted by far less severe measures. For example, according to FHA, rejection rates for African American and Latino borrowers have substantially increased among non-FHA loans.
The new FDIC and other regulatory oversight standards contained in the bill are expected to provide safer mortgage instruments but at a higher cost and more stringent requirements for both banks and individuals. It is estimated that only five banks currently control more than 65% of the current mortgage market; the new bill is expected to further consolidate this trend by favoring big banks over small. In part, this is due to the belief that big banks are easier to regulate. However, at the same time, new controls and rules regulating private investors are also expected to take another two to three years to fully define – leading many to believe the bulk of mortgages will still be backed by the United States government for the foreseeable future.
So the big banks are easier to regulate? They would be if they were only banks. But weren’t these the same guys who got us into this mess to begin with?
No, that’s not the reason at all. The big banks own Obama/Frank/Dodd and pay them millions in campaign contributions to allow them to control the market. Where do you think Dodd ends up when he retires next year? Citi, Goldman, etc for his payback for all of the wonderful legislation he pushed thru to save their asses when their world blew up?
This is more fluff to make it look like Obama is saving the world when he is only helping himself and his buddies.
I think we will look in the future and have real regrets that this bill passed as it will cost us Billions and and many jobs – just more government and less free markets is always a bad thing
WAKE UP BLOGGIES! Wall Street lobbied the heck out of Congress to stop this bill from passing the Senate. All but 2 Republican Senators voted against it. Sooo… who do these big Wall Street banks own… ah, that would be the Republicans! Also, it was the deregulated “banks” who defrauded investors with these bundled bad loans. This economic crisis that has robbed average Americans life savings of trillions of dollars could not have happened without these so-called Wall Street “banks” finding suckers to buy them.
So,lets review: Unregulated, “free market”= economic disaster. Regulating the greed of the purveyors of fraudulent investments = GOOD! GO MR. PRESIDENT!
The paradine has shifted, the political class has finally awakened the American people, this is just another example of the Washington self appointed elite destroying the freedom we as Americans demand. This bill would work well for any Marxist/communist/socialist. Country. This is a financial disaster, Freddy n fanny and government regulations were the largest cause for the collapse, they are not part of this bill…????
But at least the health bill cover gold investing….. Need I say more?
First of all Mitch has alot of growing up to do. This government is killing small banks. This means small business owners. Yes big banks caused the problems. The goverment had no business bailing the banks out. If they would have let it go smaller banks would have eaten up the failing banks and we would be in a much better place. The problem is we have many poeple like Mitch who do not believe in self responsibility. With self responsibility comes the opportunity to fail or progress. With goverment regulation comes with consequences. Also, It was the Feds you failed to oversee the lending industry in the first place. So, Obama says lets get more government to oversee more of what they could not do in the first place. They will fail again, while killing the small buseness owners and taking our freedoms away. This administration has it made. They have people out thier saying take my money, regulate me and control me. WOW, who would of thought. I think I will run as a demicrat and take control.
It has been well established that the financial crisis was caused not by a lack of regulation but by the government forcing banks to lend to people that had no business borrowing anything at all. Should the bad loans have been bundled to hide the weakness? No. Would there have been large quantities of bad loans to bundle if it wasn’t for government intervention into the financial industry? No. So anyone expecting the government to be our saviour needs to study their history a little better.
By George, George, you are spot on. Furthermore, when George Bush II tried to get Barney Frank and Chris Dodd to stop forcing the banks to make sub-prime loans,Barney and Chris said “NO”, there is no problem. Guess who authored this new bank reg bill? Right on. Barney and Chris. The foxes are in the hen house, and we have got him and her out in November.
For years and years the lenders were able to make loans to borrowers and the system was functioning smoothly. Along came the Democratic controlled congress who forced stupid open borrowing upon the lenders. Now those same Democrats in congress think they have all the right ideas of how to regulate the banks. We need to make the November election count. Our country is in danger from within.
we all are waiting for the new bill to pass. This bill will have a deep impact on the economy of the United states. This bill are expected to provide safer mortgage instruments but at a higher cost. If that happens then there will be a definite rise in the real estate market.