As part of the 2010 Dodd-Frank Act, several major changes to the mortgage industry will take effect on Jan 1, 2014. Efforts by the Consumer Financial Protection Bureau, the federal agency with rule-making authority under Dodd-Frank, to reform the mortgage lending industry from the gound up has resulted in an avalanche of new regulations, totaling nearly 4,000 pages.
While the goal of the nearly dozen new regulations is to prevent another housing crisis like the one that led to the worst recession in the U.S. since the Great Depression, the sheer volume of regulations may hurt consumers more than help them. The pendulum has swung too far the other way. Under some of these provisions, none of us would qualify for a mortgage loan.
What it all means for the consumer? Fewer, more difficult to obtain loans, which are more costly and statistically less risky but also less helpful for consumers. The intent of the rules is to help consumers, but the very people they're trying to protect will be hurt.
