The House Financial Services Committee has unveiled the Dodd-Frank Burden Tracker, an online resource to help the public keep track of all the new government rules and red tape required by the Dodd-Frank Act. Check it out if you dare.
The Dodd-Frank Act mandates that government regulators write more than 400 new rules and requirements that will be imposed on the private sector. Since the law was passed by Congress and signed by the President Obama in July 2010, the Tracker reveals that regulators have written only 185 of the 400 rules, these 185 rules consume 5,320 pages, and it will take private sector job-creators 24,035,801 hours every year to comply with these first 185 Dodd-Frank rules.
Really….you read that right. So far, about 46% of the new rules have been written. Not implemented…just written. And yes, you also read that over 24 million hours per year are required to comply with only the 185 rules written so far.
Could I be the only one who thinks this is just plain crazy? There’s no doubt in my mind that we must have effective, well-written laws on the books. The question on the mind of many of us in the mortgage business is: Didn’t we, and don’t we already have laws on the books addressing mortgage fraud? Yes, we did and yes we do. Before Dodd-Frank was ever conceived, those laws were on the books.
All the more reason for more laws, you say. Tougher ones. Ones that work, by George! It's Vern & Jimmy time...
Jimmy, did you know that mortgage fraud is more prevalent now than before this here Dodd-Frank thing came a-rollin’ down the pike?
Well now, how can that be Vern? Wasn’t this jewel of post-apocalyptic mortgage mayhem supposed to stop Wall St and every lovin cotton pickin fraudulent mortgage person in their tracks?
Now Jimmy, you and I both know that no matter how many laws you got out there, you just ain’t gonna stop them-there folks whose goal in life is to do things in a crooked manner. And you and I both know that it’s always that one bad apple that spoils the barrel and starts the downward trail to sour the cider.
So what you’re tellin me Vern is that we made a whole new set of laws to address one bad apple? Here I thought there was a passel of bad apples in this mess.
There was Jimmy, there was. A whole lot of bad apples. But, this time the bad apples came from every nook and cranny of the entire system, not just one part of it.
Well then, Vern, why aren’t we fixing the system? Wouldn’t that make more sense?
That’s a great idea Jimmy! What do you suppose would get us going in that direction?
Vern, I’m thinkin if we all give our 2 cents worth to Congress, and we vote for the folks that do what we ask them to…maybe that’d be a start?
Hmm…
We did receive an extension/clarification of the Volcker Rule, part of Dodd Frank.
The Volcker Rule bans banks from trading with their own funds and greatly limits their ability to invest in hedge and private equity funds. It seeks to limit risk-taking by banks that have government backstops like federal deposit insurance. Some of that sounds okay, but it also eliminates banks' ability to use MBS's and other instruments to hedge their locked residential pipelines - and does that really help borrowers and the public?
Anyone hedging borrower rate locks breathed a sigh of relief when the Federal Reserve clarified that U.S. banks will have at least until July 21, 2014 to ease into the Volcker rule's trading and investing crackdown. The Fed also said it has the ability to extend the compliance period for the yet-to-be-finalized rule (sound familiar?) beyond that date if needed.
I wonder if Congress and others are listening to the Jimmy’s and Vern’s out there, and truly understand we all want sensible system-wide solutions that truly work, without spending an arm and a leg to get there.
The fact is we have more than enough laws on the books; we have compliance and rules coming out our ears. It's nearly put an end to sensible lending practices. How about enforcing these laws without all of the deal-making back-room shenanigans? It’s pretty simple; put people in jail who break the law. Hand out sentences with meaning. No second chances for someone who steals our money.
And finally, how about we work on a long-term fix instead of spending more and more money on poorly crafted, expensive, and what is proving to be a boondoggle piece of legislation that will likely never be fully implemented, let alone interpreted correctly by the courts, once the lawsuits begin.
I’ve said it before and I’ll say it again. Dodd-Frank was bad legislation to begin with and it still is. No amount of dressing is gonna turn this into a tossed salad of any flavor. Consumers are writing big checks for this and we’ve only just begun.
Make your feelings known to your legislators; let them know you will be speaking with how you vote.
Don’t agree with this post? That’s OK…just don’t get mad when your mortgage lender drives you crazy with rules, regulations, underwriting and appraisal requirements that, at best, represent a major challenge and disruption in your life. And, at worst…. a loan denial.
Until next time...
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