Recap of New England Conference and Dodd-Frank Act
by Dani Krasner, J.D.
Bankers Advisory Staff Attorney
NEMBC Recap and Key Provisions of the Dodd-Frank Act
The 2010 New England Mortgage Bankers Conference (NEMBC) was held on September 15-17 at the Rhode Island Convention Center in Providence. I attended the Conference on Thursday, along with fellow staff attorney Lindsay Sayre Kift, and the following is a recap of my experience at the NEMBC.
The NEMBC is one of the largest regional conventions in the United States and featured over 50 corporate booths in the Exhibition Hall. This year, the conference included a full educational program enabling attendees to complete NMLS accredited courses. The Rhode Island Convention Center ballroom was packed with booths featuring exhibitors from all facets of the industry.
The Fannie Mae/Freddie Mac Update focused on the results of the latest National Housing Survey. Mark Bickert, VP for Single Family, Fannie Mae and James Cotton, VP Sales, Freddie Mac discussed efforts to stabilize the housing market. Mr. Bickert addressed Fannie Mae’s new goals, their priority to serve their customers, as well the implementation of Loan Quality Initiative enhancements aimed at increased policy and regulatory compliance. Mr. Cotton discussed his hope that the purchase market will rebound and emphasized that underwriting quality control is improving. Both Bickert and Cotton took several questions from the audience, including those about the HAMP program, GSEs, and congressional oversight.
The HUD/FHA Update was lead by Gerry Glavey, Director of the Processing and Underwriting Division at HUD. Mr. Glavey’s presentation focused on the changing landscape of FHA-Insured Loans. He highlighted substantial changes in FHA lender approval, as well as modifications to upfront MIP, underwriting policy, and appraisal portability. Mr. Glavey was careful to note that many of the underwriting policy changes are “proposed,” and that only time will tell which will take effect and what the ramifications will be on the mortgage industry.
The NEMBC is one of many conferences in the mortgage banking industry where a main topic of discussion surrounds the Dodd-Frank Wall Street Reform Act and Consumer Protection Act. Signed into law on July 21, 2010, the Dodd-Frank Bill is a massive piece of legislation that is 2,300 pages long and includes 16 titles. Title X establishes the Consumer Financial Protection Bureau (CFPB) and Title XIV, Mortgage Reform and Anti-Predatory Lending Act, includes provisions that affect originator compensation and underwriting requirements.
Key Provisions of the Dodd-Frank Bill
• Establish Financial Stability Oversight Council to address systemic risks
• Provide liquidation authority to permit orderly liquidation of systemically risky companies
• Revise bank and bank holding company regulatory regime by transferring Office of Thrift Supervision functions to Office of Comptroller of Currency (OCC) and clarifying regulatory functions of Federal Deposit Insurance Corporation (FDIC) and Board of Governors of Federal Reserve (FRB)
• Establish regulation of investment advisors to hedge funds
• Establish a new Federal Insurance Office to monitor insurance industry including regulatory gaps that could contribute to systemic risk
• Restrict banks, bank affiliates and bank holding companies from proprietary trading or investing in a hedge fund or private equity fund
• Increase regulation and transparency of over-the-counter derivatives markets
• Establish new regulation of credit rating agencies
• Establish new requirements regarding executive compensation including shareholder “say on pay”
• Require securitizers to retain economic interest in assets they securitize
• Empower new CFPB as an independent office in FRB with broad new authorities and functions and responsibilities under wide range of current consumer financial protection laws
• Establish extensive requirements applicable to mortgage lending industry, including detailed requirements concerning mortgage originator compensation and underwriting, high-cost mortgages, servicing, appraisals, counseling and other matters
• Preserve enforcement powers of states respecting financial institutions and restrict preemption of state laws by federal banking regulators
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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