The Changes That Have Been Imposed On U.S. Financial Services Firms Since Dodd-Frank Act Since 2010

Mar 5, 2015 by

Have you wondered what is different now since Dodd-Frank was adopted in 2010 for banks, lenders and consumers?

Here is a simple chart that shows The Changes That Have Been Imposed On U.S. Financial Services Firms Since Dodd-Frank Act Since 2010

Interestingly, the creator of this chart is none other than SEC Commissioner Daniel Gallagher.  He had his staff  created an overwhelming diagram to show all the new regulations that have been imposed on U.S. financial services firms since enactment of the Dodd-Frank Act in 2010.

The MPA (Mortgage Professional America) shared a mind-blowing graphic that Commissioner Gallagher and his staff  put together to illustrate the scope of the changes that Dodd-Frank brought forth:


“No regulator, as far as I know, has considered the overall regulatory burden on financial services firms when determining whether to impose additional costly regulations,” Gallagher said. “We as regulators are, when it comes to the possibility that our rules are causing death by a thousand cuts, the proverbial ostrich—head firmly entrenched in the sand.”

He added that he and his staff created the image to help the public fully grasp the breadth of recent rulemaking. “I hope this stark depiction can spark a much-needed debate about the regulatory burden that has been placed on our financial services industry in just the last 4.5 years alone.”

“The stakes here are considerable: regulatory burdens divert capital away from the real economy—this acts as a barrier to entry for new market participants and further entrenches those institutions that are increasingly “too big to fail,” he added.

I attended a mortgage closing yesterday and at the end of the closing my client turned to me and asked me a question about  the the mortgage process he just went through. He asked “is it always like this?”

My answer; Yep, ever since 2010 and Dodd-Frank!



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Fannie Mae Will Buy 97% LTV Mortgages

Nov 3, 2014 by

Fannie Mae Will Buy 97% LTV Mortgages

In an article published in Housingwire on October 20, 2014, Fannie Mae Will Buy 97% LTV Mortgages.

According to Housingwire, Fannie Mae CEO Timothy Mayopoulos said the government-sponsored enterprise will soon begin offering a 97% loan-to-value mortgage. Speaking at the Mortgage Bankers Association Annual Convention & Expo, Mayopoulous said the government-sponsored enterprise is working “closely” with the Federal Housing Finance Agency to offer this product to all Fannie associates.”

This is a reverse of the August 20, 2013 announcement that Fannie Mae’s 3% down loan would be discontinued.

“Through these revised guidelines, we believe that the Enterprises will be able to responsibly serve a targeted segment of creditworthy borrowers with lower-down payment mortgages by taking into account ‘compensating factors.’ While this is a much more narrow effort than our work on the Representation and Warranty Framework, it is yet another much needed piece the broader access to credit puzzle. Further, details about these new guidelines will be available in the coming weeks as we continue to advance FHFA’s mission of ensuring safety, soundness and liquidity in the housing finance markets.”

Here is a copy of the original announcement of the program and the subsequent reversal:

This is an update on our March 28, 2013 post 3% Down Conventional Loan To Replace 3.5% Down FHA?

On August, 20, 2013, Fannie Mae announced that the 3% Down Conventional Loan is Going, Going, Gone!

In a new Fannie Mae Desktop Originator/Desktop Underwriter Release Notes DU Version 9.1, Fannie Mae states that beginning the weekend of November 16, 2013, there are a LARGE number of changes to Fannie’s Desktop Underwriting software.

Additionally, this new release effectively eliminates the recently added Conventional 97 Loan beginning January 10, 2014.

“LTV/CLTV/HCLTV Ratio Cap Lowered to 95%

DU Version 9.1 will reflect lower maximum LTV/CLTV/HCLTV ratios for standard and My CommunityMortgage (MCM) fixed-rate transactions secured by a 1-unit primary residence. Those transactions will be subject to a maximum LTV/CLTV/HCLTV of 95% (instead of 97%). DU will continue to allow CLTV ratios for 105% when the subordinate financing is a Community Seconds mortgage”

Here is a re-print of the original post but this really doesn’t mean anything since the loan in going away:

April 1, 2013 makes the date that FHA MIP (Mortgage Insurance Premium) goes up. Under the guise of “we need more money to function” , FHA (Federal Housing Administration) is passing along a 10 basis point increase to all FHA borrowers – an $18 monthly increase on a $200,000 loan. Also, beginning June 3, 2013, FHA will make MIP permanent on all loans which is a change from the current guidelines.

We wrote about these changes in a previous post that can be found here.

These new changes to FHA are opening the door to other cheaper alternatives for new home buyers.

Namely, Fannie Mae Conventional 97 loans. This program, offered by Fannie Mae, appears to be more competitive than FHA and will therefore attract a lot of interest and will probably take a chunk out of FHA’s business. This new loan is an alternative to FHA’s low down payment. Previously, Fannie Mae offered 3% down financing but there were income and home ownership requirements involved.e

The new Fannie Mae Conventional 97 program requires only 3% down vs. FHA’s requirement of 3.5% down. Another attractive selling point to the Fannie Mae 97 loan, beside the low down payment, is the low mortgage insurance rate and the ability to get a gift of the down payment from a family member.

Here are some of the basic highlights of this program:

  • 3% down – That’s $4,500 down on a $150,000 purchase price vs. $5,250 down on an FHA laon
  • No Upfront Mortgage Insurance – FHA currently charges 1.75% and adds that to the loan. That’s a savings of $2,625 on a $150,000 purchase
  • Single Family purchase or refinance only- includes single family detached, single family attached, condos, townhomes. Cannot be used for 2-4 unit homes
  • Owner Occupied primary homes
  • 680 Credit Score required if 3% down payment comes from borrowers documented funds
  • 740 Credit Score required if 3% down payment comes from gift
  • Fixed Rate Only – 30-year, 15-year loans
  • $417,000 maximum loan size
  • Private Mortgage Insurance required – based on Fannie Mae guidelines. Rates are credit score based
  • 45% Debt-To-Income on borrower’s paying their own down payment
  • 41%  Debt-To-Income on borrower’s getting gift funds for down payment

If you’re in the market to buy a new home with a low down payment, contact us for more information on the Fannie Mae Conventional 97 program. This program gives home buyers another low down payment option that they may not be familiar with. If  you’re a current homeowner and are considering refinancing your loan, please call for a no cost analysis.

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Things Realtors And Loan Officers Wish They Could Say

Dec 31, 2013 by

This is a great piece of Real Estate and Lending humor to end the year with. Always go out laughing.

Ryan Hills & Gary Hawkinson of the RE Source.TV, who are in fact Real Estaste Professionals, show what this year has been like in the life of a Realtor and a Mortgage Loan officer.

Hope you find your house. Hope you have a very Happy 2014.

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Detroit #1 Housing Turnaround City!

Nov 6, 2013 by

According to Diana Olick, CNBC’s Realty Check correspondent and editor, Detroit is the #1 Housing Turnaround City in the 3rd quarter of 2013!

According to Ms. Olick, a recent survey based upon median home prices, supply of homes for sale and how many days it takes to sell the home, Detroit …and Ann Arbor are two of the Top 5 markets:

“While once considered to be the epitome of the housing sector decline, Detroit has seen itself become the beneficiary of an improving market. Shortly after the city filed for bankruptcy, its housing market demonstrated an increased propensity progression. This is due largely, in part, to increased investor activity. In fact, the rate in which Detroit’s market is accelerating has placed it on top of this list.”

The reason for Detroit’s turnaround seems to be in the recovery of the auto industry. Detroit home prices are up 44% over last year and homes are selling at a much faster pace than the past 3 years.

Here is the full Top 1o 3rd Quarter 2013 Turnaround Markets:

11-6-2013 3-41-44 PM
















It will be interesting to see how Real Estate…and specifically, Detroit real estate, evolves in 2014.

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FHA Q&A Regarding Government Shutdown

Oct 6, 2013 by

FHA Q&A Regarding Government Shutdown

Below is an article that we picked up from several sources including the Appraisers and Active Rain on FHA Q&A Regarding Government Shutdown.

We are not able to find it as a letter but we will attempt to post when it’s available:

FHA INFO #13-63

Distribution Date: October 4, 2013

As a result of the government shutdown, FHA Single Family has received several questions regarding our operating plans which we have clarified in the following Q&As. These Q&As have been added to the Frequently Asked Questions database accessible through the FHA Resource Center.

We greatly regret the inconvenience that this shutdown has caused, but hope the following is helpful during this time.

Q: Can I get an FHA case number?
A: Yes. Lenders will be able to obtain an FHA case number from the FHA Connection.

Q: Will FHA endorse single family loans during a shutdown?
A: FHA will be able to endorse single family loans, with the exception of Home Equity Conversion Mortgages (HECM) and Title I loans, during the shutdown. A limited number of FHA staff will be available to endorse new loans. Due to limited staff, the time to endorse the cases may be extended.

Q: Will FHA still be able to endorse my loan if I am not able to obtain tax returns verified by the IRS during the shutdown?
A: FHA is aware that some lenders obtain tax transcripts directly from the IRS for use in underwriting their FHA-insured loans. These lenders may be unable to actually obtain any returns directly from the IRS for the duration of the Government shutdown.

Lenders may continue originating loans using FHA’s existing underwriting requirements, which have not changed as a result of the shutdown. Lenders are required to obtain tax returns from certain borrowers in order to originate FHA-insured loans and lenders must also continue to obtain the borrower’s signed authorization (i.e., Forms IRS 4506, IRS 8821, or whatever form or electronic retrieval service is appropriate) for any loan for which the borrower’s tax returns are required.

Q: Why didn’t the borrower’s name and Social Security Number pass validation with the Social Security Administration?
A: When the lender requests the FHA case number, the borrower’s name, date of birth and Social Security Number (SSN) and property address are entered into FHA Connection (FHAC). If the overnight matching process with Social Security Administrations (SSA) fails, a Case Warning for SSN Validation will be placed on the case number. The failure could occur because the data doesn’t match or because the system went offline due to the government shutdown. SSA has limited tolerance for minor mistakes in names, birth dates and social security numbers, so lenders are reminded of the importance for accuracy in these three data elements when requesting a case number.

Q: Can the Social Security Number validation be run again?
A: Lenders do have the opportunity to make the necessary corrections and a second attempt to validate with SSA will occur. Any changes made to the borrower’s name, birth date and SSN at any time prior to insurance endorsement will trigger a validation request with SSA. If the revised data passes validation, the Case Warning for SSN Validation will be removed.

If the failure was caused by the government shutdown, the Case Warning for SSN Validation will not be able to be removed until the government reopens. FHA will ensure that the validation process takes place and lenders will be advised of the results in FHAC as soon as possible upon the reopening of the government.

Q: Can I continue to process the loan without the Social Security Number validation?
A: Lenders may continue processing loans without receiving validation of the borrower’s name and SSN, but FHA will not endorse loans without this validation. For the Lender Insurance program, lenders will not be able to insure the loans for which this validation has not been received.

Q: What happens if I cannot validate the borrower’s SSN?
A: The lender may submit a request for insurance endorsement if confident that the Case Warning was received in error as a result of a system shutdown. The lender must provide conclusive documentation to verify the SSN such as a valid SSN card issued by the SSA, or an original document issued by a federal or state government agency, which contains the name of the individual and the SSN of the individual, along with other identifying information of the individual in the case binder to support the validity of the borrower’s name and SSN to the applicable Homeownership Center (HOC).

Lenders may not endorse any loans with Case Warnings for SSN Validation and FHA will require the lender to submit the case binder for endorsement along with conclusive documentation to verify the SSN such as a valid SSN card issued by the SSA, or an original document issued by a federal or state government agency, which contains the name of the individual and the SSN of the individual, along with other identifying information of the individual in the case binder to support the validity of the borrower’s name and SSN to the applicable Homeownership Center (HOC).

If upon review, FHA believes the documentation provided complies with HUD’s regulations and the loan meets all other FHA requirements, the HOC will endorse the mortgage for insurance.

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Michigan Mortgage Rate Update

Aug 15, 2013 by

Here is the Michigan Mortgage Rate Update for Thursday, August 15, 2013.

OUCH!!!!! Very bad night last night.

Mortgage Backed Securities (MBS) gaped DOWN while we were all sleeping:

8-15-2013 4-47-40 PM 1












This caused a -57 basis point drop in MBS levels. The Dow Jones opened over -200 points down and didn’t recover closing at -226 for the day.

Talk of  Federal Reserve tapering support, an improvement of jobless claims and a jump in new housing starts has spooked all the markets.

Here is what Mortgage Backed Securities did today:

8-15-2013 4-48-02 PM 2












You can see they barely recovered during the day gaining +22 bps to offset the overnight losses.

We’ve broken through the floor and now have to build in some support levels to get back to where we were yesterday.





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