What does the Dodd-Frank Wall Street Reform and Consumer Protection Act really mean? The crux of the legislation reads like this: Welcome to the world of the "qualified mortgage"--more lending requirements, more risk to originators, less origination revenue. * There are many rules imposed by Dodd-Frank that originators are going to have to adhere to, not only as it pertains to their regulated-entity status under the Consumer Financial Protection Bureau (CFPB), but to their investors as well. This new Dodd-Frank Act is going to require originators to have origination and underwriting processes and products locked down and will require additional paperwork to move with the loan into the secondary market. * There will be much confusion in the industry with the absence of clear and definitive regulations, and most speculate this clarity won't come for months--maybe years. * Until the secondary market gets comfortable with the exact requirements placed upon the lenders and the application of assignee liability, the liquidity in the primary market will be extremely limited, and access to credit will be equally as limited. The following changes pose the most significant impact on how mortgage originators will be required to conduct operations in the future. What is the CFPB and what authority does it have?
