Oh, no! Trump dismantling consumer protection

 Regulations  Comments Off on Oh, no! Trump dismantling consumer protection
Feb 202017
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Despite the hysterical headlines that President Trump was dismantling consumer financial protections by executive order, the truth is much less exciting.

Trump has called Dodd-Frank, the recession-era law that created the current regulatory structure, a disaster and pledged major reforms. Earlier this month, he ordered his financial team to review the law and develop a plan to overhaul it. This starts a likely many-month process to modify Dodd-Frank and other financial regulations that are stifling lending and driving community banks out of business.

While Trump conceivably could rewrite or reverse some financial regulations once his appointees take charge at various federal agencies, he cannot change statutory rules, such as those enacted through Dodd-Frank, without Congressional action.

Unfortunately for those hoping for quick action, that appears unlikely. While the House already is moving legislation to rewrite the law, Senate Republicans need help from Democrats. Senate Banking Comm Chair Mike Crapo says, “The climate right now in the Senate is as toxic as I’ve ever seen it.” Crapo hopes he can get some Democratic support for changes that will promote lending by easing rules for smaller and community banks.

The eventual changes could be significant, but the pace of change will allow for serious consideration and certainty doesn’t justify the silly headlines.

Why are appraisals so expensive?

 Regulations, Residential Mortgage  Comments Off on Why are appraisals so expensive?
Jan 192016
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

“Back in the day, I could order an appraisal for $350.” So began a conversation with a couple other “old-timers” in the mortgage industry about the current high cost of appraisals. The only problem is “back in the day” was only a couple years ago. Today, a typical conventional loan appraisal costs $500 and an FHA appraisal can cost $600. Why has the cost increased so much in such a short time?

Several factors are to blame, and we’ll examine them today and tomorrow.

– After the financial crisis, regulators decided that because a few loan officers at Washington Mutual Bank had leaned on appraisers to falsify values that all loan officers should be punished. (Reminds me of elementary school, but then again, so do a lot of things the government does.) As a result, appraisals now are ordered through an appraisal company middleman. And, of course, the middleman charges a fee.

Initially, the middlemen just took their fee from the appraiser’s fee, meaning appraisers received less. However, recent legislation required that appraisers receive their usual fee, so middleman fees forced appraisal prices to rise.

Tomorrow, we’ll examine a couple other factors and the effect these may have on the broader housing market.

New mortgage rules cost you money

 Regulations, Residential Mortgage  Comments Off on New mortgage rules cost you money
Nov 262014
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

I read an interesting article the other day that claimed that all the new mortgage regulations have saved you money. Feeling richer? What a bunch of bull.

Every honest analysis I’ve read about the effects of the new regulations, and by honest I mean ones that aren’t poorly disguised advertisements like this one I read, shows the regulations have increased costs by 30 to 50 percent. Sure, as the article states, you can get a no-closing-cost mortgage now, but you could do that before the regulations went into effect. And do you really think everyone loves you so much they’re all working for free? All those costs, those higher closing costs, are getting built into your interest rate. I recently read a report that estimated the regulations have added as much as 0.5% to the interest rate of every mortgage. Over the life of a $200,000 loan, that means you’re paying an extra $20k because of the new regulations.

Now, I’m not suggesting we overlook the excesses of the last decade, but I am calling bull**** for what it is. Maybe it’s time we become more careful about the excesses of regulation.