Mr. Dodd and Mr. Frank
If the housing market wasn’t already suffering enough…News released today…Wells Fargo is passing the “pain” on to it’s new mortgage loan clients making it more difficult to get a home loan…or at least costing the buyer more up front.
2010 saw the new “Dodd-Frank” bill put into action to protect investors on Wall Street from unscrupulous activities. One of the ways identified was to require any bank to “retain” 5% of the loan amount if the loan was to be “secularized” on the open market.
What does this mean? Basically…if banks sell their mortgages to investors on Wall Street, the bank must retain 5% of the amount to protect the investor. In reality…what’s the 5% going to mean if 50% goes bad? Not much. However, our politician had to come up some creative way to justify their presence in the DC.
I supported Mr. Frank in his holding banks accountable, however, I be the first to say…I was very disappointed with the solution. More “lame” bureaucracy is the only solution we have experienced.
This snippet article from “The Truth About Mortgage. com” was released today:
Wells Fargo wants borrowers to put down 30 percent on mortgages to avoid a new requirement that will require mortgage lenders to retain five percent of the loan if it’s securitized, according to the WSJ.
This so-called “risk retention” is related to new regulations required by the Dodd‐Frank Wall Street Reform and Consumer Protection Act of 2010.
The goal is to ensure that banks and lenders that write risky mortgages retain some of that risk to promote responsible lending.
I’m sure there will be more to come…
Best,
Kris
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