On regulations designed to keep lenders from making risky loans to borrowers, Rep. Barney Frank (D-Mass.) said Tuesday that mortgage lenders must not oppose the new rules to protect borrowers.
Frank, co-author of the Dodd-Frank financial overhaul, spoke before conference attendees of the Mortgage Regulatory Forum this week telling those attendees of his disappointment regarding push back against the risk retention proposals that would cut down on risky lending.
“I am disappointed at this revolt against risk retention that was so clearly at the center of this,” Frank said in a Boston Globe report. “All the other problems we had … they all centered on the system for selling to other people loans that shouldn’t have been made in the first place.”
The “revolt” under way comes in the form of industry opposition to the risk retention proposals, which would require new restrictions for qualified residential mortgages.
While FHA loans do not qualify under those rules, the reverse mortgage industry has experienced numerous changes under Dodd-Frank, some of which have yet to be fully implemented. Additionally, the industry is working on the development of a financial assessment that has the potential to cut down on risk to reverse mortgage borrowers and lenders by ensuring that borrowers can meet their loan obligations.
“It’s simply not possible with any conceivable number of regulators to monitor every loan. If the people making the loans do not have an incentive not to lend to people who can’t repay, there is no way we will prevent those kinds of loans from being made,” Frank said in the Globe report.
Read the Boston Globe article.
Written by Elizabeth Ecker