SFGate reports the debate taking shape over the Dodd-Frank Act and its impact on financing and American housing. Seven agencies working under twin Dodd-Frank mandates decide in months which mortgages will be labeled low-risk. “This is the first step in reshaping our housing finance system,” said Ethan Handelman, vice president for policy at the National Housing Conference, a non-profit coalition including bankers such as Wells Fargo and advocacy groups such as the National Low Income House Coalition. “It has implications far beyond the specific step it takes. It sets you on a path,” Handelman said. Qualified mortgages or QMs must have low fees, be predicable in term and prove the borrower can repay. QRMs or Qualified Residential Mortgages will exempt lenders from a rule that would compel a 5% stake in mortgages sold to investors. Defining the rules is so complex, the National Association of Realtors called the situation “chaotic.” “The regulation of the mortgage lending industry is becoming so complex that it threatens to weaken the system instead of curing abuses,” the trade group wrote. “The proposed rule does the exact opposite of its intent,” said Stella Adams, executive director of the North Carolina Fair Housing Center, a non-profit consumer advocacy organization based in Durham. “You can’t in the middle of a recession gut the entire system.” Housing and Urban Development (HUD) Secretary Shaun Donovan said: “It’s really important to remember that we have homeowners that have been successful — take FHA — with lower down- payments,” “The concern I have is that if we focus only on down payments, we miss the other things that make somebody successful.” Donovan has been a minority voice among federal regulators with this perspective.
