Recently, Congress enacted the Dodd-Frank Act, also known as the Financial Reform Act, to stop some of the home loan practices that they say helped bring about the current real estate recession.
Financial Reform Act – the Dodd Frank Act
It is far reaching and all-encompassing. Read what the NY Times says about the Dodd- Frank Act
I called my friend John King of Wells Fargo Private Mortgage Advisors, a division of Wells Fargo Bank, and asked him how this would affect the cost of obtaining a home loan in the future.
Here is his response:
“In a word, “Yes”.
It will be more expensive in the long run to get a loan due to all of the new “Financial Reform” legislation hitting the mortgage industry.
This type of legislation is always written with the “intent” of protecting the consumer from the evils of the industry the legislature seeks to regulate. Unfortunately there is “No Free Lunch” in anything we do.
When you force any industry to conform to new, stricter regulations, there is always the cost of interpretation, implementation and consistent policing of these regulations.
In the past year, the size of the home loan industry has been whittled down substantially.
With implementation of both California and Federal Licensure of Mortgage Originators, and the most recent SAFE Act (which actually does background investigations of mortgage originators), we are definitely seeing a much higher grade of lending professional and mortgage originator in the business today.
However, this is a cost to the banks and mortgage originators themselves which increases the cost of doing business.
Sooner or later, these costs will be added to the price we pay in rates and fees to get a loan.”
To get more information about rates, fees, and other aspects of the home loan process, contact John King of Wells Fargo Private Mortgage Advisors, a division of Wells Fargo Bank.
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