3 ways Dodd Frank law will roil real estate in 2014

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3 ways Dodd Frank law will roil real estate in
2014
http//finance.yahoo.com/blogs/breakout/3-ways-dod
d-frank-law-will-roil-real-estate-in-2014-12502187
1.html
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Chris Dodd and Barney Frank have long since
retired, but the namesake legislation they
crafted four years ago is about to unleash
sweeping changes in the mortgage and real estate
markets.   According to real estate attorney
Shari Olefson, who also wrote the book Financial
Fresh Start, the changes took effect January 1st
and few people even know about them.   Its not
a bad idea to have less risky loans, she says in
the attached video. The problem is folks are
just not really ready for this. Banks have been
preparing for this for a while, but folks on the
street are just not aware of it.   What shes
talking about is the coming dawn of the qualified
or safe harbor mortgage era.
http//finance.yahoo.com/blogs/breakout/3-ways-do
dd-frank-law-will-roil-real-estate-in-2014-1250218
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Heres the problem. In order for banks to
benefit from a safe harbor against lawsuits by
borrowers, the loans they issue now under Dodd
Frank have to be considered qualified mortgages,
Olefson says.   Specifically, she says that
means debt-to-income ratio cannot exceed 43,
points and costs cannot exceed 3 and banks must
independently verify that a borrower has the
ability to repay via eight different criteria.
  While the all sounds logical and well
intentioned, Olefson foresees some
problems.   Heres the catch, about 20 of
people who have mortgages right now, will not be
able to get qualified mortgages. So whats going
to happen to those people is theyre going to
have to go elsewhere for the new mortgage loans,
or banks will have to price them more expensively
because they dont have these protections against
lawsuits.  
http//finance.yahoo.com/blogs/breakout/3-ways-d
odd-frank-law-will-roil-real-estate-in-2014-125021
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What that means, she says, is that its starting
to sound like we may be seeing what used to be
sub-prime loans again, as well as the reality
that more people will be pushed into the rental
market.   Again, while this may be news to Mom
and Pop, institutional money has been pouring
into residential, single-family homes for years,
and Wall Street is now poised to collect
rent-checks until the real estate market rebounds
enough for a suitable return on investment. As
she frames it, private industry is stepping in
exactly as Uncle Sam is easing out of the
mortgage business.   Olefson also points out that
all of this comes at a time when homeownership
levels are already falling, from a peak of 69 to
just 63 today. Its a trend she fears could
carry huge societal ramifications given the fact
that 75 of American wealth has historically come
from home ownership, or as she calls it,
essentially a forced savings account.   Mess
with that safety net, and its easy to see why
she says the ripple effects of unintended
consequences could easily outweigh the benefits
of a four year old law.
http//finance.yahoo.com/blogs/breakout/3-ways-d
odd-frank-law-will-roil-real-estate-in-2014-125021
871.html