Frank Tells Mortgage Regulatory “Revolters” To Back Off

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.”

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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

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  • The biggest problem for our industry is with proprietary reverse mortgages.  Will they be exempted?  It could certainly delay the reintroduction of those products on any scale at all.  Not many lenders have the financial wherewithal to originate those products under such terms.

  • The Feds have gone much further than they needed to with new regulations.  The main problem was the origination of mortgages for which borrowers didn’t need to prove they could make the payments.  They should have stopped with that rather than piling on.  Barney Frank is part of the problem.

  • Let’s stop all this lunacy regarding taxing seniors. The default rate would automatically decrease to zero, if seniors were simply exempt from paying any school tax. Since a senior cannot obtain any benefit from paying this tax it simply should not be levied on them. I say, let those who are the age who can have children of school age pay, not seniors 

    • KatyDog,

      Sad to say, that idea is without much merit.  Schools are only a small factor of what county taxes go to.  Just ask the folks in Sun City West, AZ.  And who helped pay for the eduction of the children of seniors if not the seniors of that generation? 

  • Much of the current mortgage legislation was a knee jerk reaction to past events. It does not seem there were a lot of thought given to the long term implications. Consequently the unattended consequences have harmed the industry more than the regulation itself.

    • gciungan,

      I love it. 

      It seems like as in the case of this White House, when it comes to consequently consequences, the underlying Congressional initiated causes are unattended by any adults.

      Getting past the chuckle, from what are the consequences coming forth if not regulation?  Even laws in some measure regulate.

  • “He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.”

    One of the complaints against the King of England listed in the Declaration of Independence.  According to our forefathers, Dodd-Frank is a legitimate basis for revolt.

  • .
    How dare Barney Frank to come out and say “Back Off”! This man and the creation of his master piece, the “Financial Regulatory Reform Bill” is crippling our entire financial system. Now with the formation of the CFPB (Consumer Financial Protection Bureau) this group is ravaging terror through out the banking industry, especially with community banks. The regulations that have been levied on the banking industry because of initial actions on the part of Franks and Dodd is creating havoc, failures and mergers across the country on the part of community banks.  Once the pillar of communities and the life line for the small business man, the community banks are fighting for their mere survival. People all around the country need NOT to back off, no, on the contrary, much more needs to be done, a lot more complaining and calling for the repeal of this bill needs to be done! I am shocked that this man would have the gall to tell lenders to back off! The only hope for the future of our industry and the  financial markets is to repeal/revoke the “Financial Regulatory Reform Bill, commonly known as the “Dodd-Frank Bill”! John A. Smaldone

  • While I sincerely appreciate the long time support of Representative Frank for the HECM program itself, when I go to Sourcewatch.org and read some of his statements of the past on Fannie Mae and Freddie Mac two much more important aspects of the mortgage industry than HECMs, your record on this front is not great.
     
    “In 2003, Frank said, ‘These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'”
     
    “In 2004, Frank said at a hill hearing that a Office of the Federal Housing Enterprise Oversite (OFHEO) report of illegal activity by Fannie Mae does not ‘raise safety and soundness [of Fannie Mae investments] problems at issue’.”
     
    I like many things you have to say but “revolt?”  You did not let the Republicans in the front door to play and now you are mad because they want to have their play time as well.  Dodd-Frank is not your mess; Chris Dodd the former “Countrywide mortgaging” Senator is the culprit.  On this one you would be wiser to stay out of the playground.  You know whatever they do our President will veto.  Just remind them of and humiliate them with that fact. 

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