Senator Raises Mortgage Concerns with Dodd-Frank Bill
Senator Raises Mortgage Concerns with Dodd-Frank Bill
Senator Raises Mortgage Concerns with Dodd-Frank Bill
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February 3, 2011 (Jeff Alan)
mortgage-kay-hagan-image
Senator Kay Hagan (D-NC), a member of the Senate Banking Committee, has raised questions with U.S. banking regulators over a provision in the Dodd-Frank Finance Reform Bill that could potentially make it difficult for consumers to get home loans.

Sen. Kay Hagan, (D., N.C.) said in an interview Wednesday that she is “very concerned” that regulators will be too stringent in defining which loans are deemed less risky and therefore exempt from requirements imposed by the Dodd-Frank financial overhaul passed last summer.

One of the provisions in the new law mandates that banks must retain 5 percent of the risk of a loan if it is packaged into securities and sold to investors. The whole idea of the provision is that if banks retained a percentage of risk in the securities that they sell, banks would be more cautious in their lending standards because they would still stand to lose if the borrower defaults.

Joining Hagan were Senators Mary Landrieu (D-LA) and Johnny Isakson (R-GA), who have co-sponsored an amendment to the financial overhaul bill providing an exemption for safe mortgages which in return puts the burden of defining a “safe mortgage” on the regulators.

Without an interpretation on what is a safe mortgage, there is fear within the banking industry that only loans with a 20% down payment or more would be considered a safe mortgage thus receiving an exemption. Most of the lending industry favors a broader definition.

If the definition mandates a high down payment requirement, it could also harm the mortgage insurance industry, which allows borrowers to take out loans with lower down payments by collecting insurance premiums from borrowers.

Critics also fear that banks, trying to avoid having to retain any risk in the securities they sell, will require higher down payments or charge much higher fees and interest rates to borrowers who don’t meet the requirements of a safe mortgage. That could potentially raise the bar so high that many consumers would not be able to obtain a mortgage, which coming out of the current housing crisis could be devastating to the mortgage and housing industry and the economic recovery.

Hagan stated, “I certainly didn’t want to narrow the availability (of credit), which I think there’s a lot of concern about. If you do that, then I think you’ll ultimately have a smaller number of entities that are able to provide those mortgages.”

Tags: senate banking committee, safe mortgages, loans, banks, lenders, credit, banking industry, securities, dodd-frank

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Helpful Tools
Mortgage
Calculator

Estimate your monthly mortgage payment
Auto Loan
Calculator

Determine how much car you can afford before buying
Learn About
Mortgage Loans

Learn about the different types of home loans
15 Year vs 30 Year
Loan Comparison

Compare 15 year and 30 year mortgage loans
Todays Mortgage
Rates

See today's mortgage rates. Shop, compare and save.

February 3, 2011 (Jeff Alan)
mortgage-kay-hagan-image
Senator Kay Hagan (D-NC), a member of the Senate Banking Committee, has raised questions with U.S. banking regulators over a provision in the Dodd-Frank Finance Reform Bill that could potentially make it difficult for consumers to get home loans.

Sen. Kay Hagan, (D., N.C.) said in an interview Wednesday that she is “very concerned” that regulators will be too stringent in defining which loans are deemed less risky and therefore exempt from requirements imposed by the Dodd-Frank financial overhaul passed last summer.

One of the provisions in the new law mandates that banks must retain 5 percent of the risk of a loan if it is packaged into securities and sold to investors. The whole idea of the provision is that if banks retained a percentage of risk in the securities that they sell, banks would be more cautious in their lending standards because they would still stand to lose if the borrower defaults.

Joining Hagan were Senators Mary Landrieu (D-LA) and Johnny Isakson (R-GA), who have co-sponsored an amendment to the financial overhaul bill providing an exemption for safe mortgages which in return puts the burden of defining a “safe mortgage” on the regulators.

Without an interpretation on what is a safe mortgage, there is fear within the banking industry that only loans with a 20% down payment or more would be considered a safe mortgage thus receiving an exemption. Most of the lending industry favors a broader definition.

If the definition mandates a high down payment requirement, it could also harm the mortgage insurance industry, which allows borrowers to take out loans with lower down payments by collecting insurance premiums from borrowers.

Critics also fear that banks, trying to avoid having to retain any risk in the securities they sell, will require higher down payments or charge much higher fees and interest rates to borrowers who don’t meet the requirements of a safe mortgage. That could potentially raise the bar so high that many consumers would not be able to obtain a mortgage, which coming out of the current housing crisis could be devastating to the mortgage and housing industry and the economic recovery.

Hagan stated, “I certainly didn’t want to narrow the availability (of credit), which I think there’s a lot of concern about. If you do that, then I think you’ll ultimately have a smaller number of entities that are able to provide those mortgages.”

Tags: senate banking committee, safe mortgages, loans, banks, lenders, credit, banking industry, securities, dodd-frank

FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
HOW LOANRATENETWORK
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ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.
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February 3, 2011 (Jeff Alan)
mortgage-kay-hagan-image
Senator Kay Hagan (D-NC), a member of the Senate Banking Committee, has raised questions with U.S. banking regulators over a provision in the Dodd-Frank Finance Reform Bill that could potentially make it difficult for consumers to get home loans.

Sen. Kay Hagan, (D., N.C.) said in an interview Wednesday that she is “very concerned” that regulators will be too stringent in defining which loans are deemed less risky and therefore exempt from requirements imposed by the Dodd-Frank financial overhaul passed last summer.

One of the provisions in the new law mandates that banks must retain 5 percent of the risk of a loan if it is packaged into securities and sold to investors. The whole idea of the provision is that if banks retained a percentage of risk in the securities that they sell, banks would be more cautious in their lending standards because they would still stand to lose if the borrower defaults.

Joining Hagan were Senators Mary Landrieu (D-LA) and Johnny Isakson (R-GA), who have co-sponsored an amendment to the financial overhaul bill providing an exemption for safe mortgages which in return puts the burden of defining a “safe mortgage” on the regulators.

Without an interpretation on what is a safe mortgage, there is fear within the banking industry that only loans with a 20% down payment or more would be considered a safe mortgage thus receiving an exemption. Most of the lending industry favors a broader definition.

If the definition mandates a high down payment requirement, it could also harm the mortgage insurance industry, which allows borrowers to take out loans with lower down payments by collecting insurance premiums from borrowers.

Critics also fear that banks, trying to avoid having to retain any risk in the securities they sell, will require higher down payments or charge much higher fees and interest rates to borrowers who don’t meet the requirements of a safe mortgage. That could potentially raise the bar so high that many consumers would not be able to obtain a mortgage, which coming out of the current housing crisis could be devastating to the mortgage and housing industry and the economic recovery.

Hagan stated, “I certainly didn’t want to narrow the availability (of credit), which I think there’s a lot of concern about. If you do that, then I think you’ll ultimately have a smaller number of entities that are able to provide those mortgages.”

Tags: senate banking committee, safe mortgages, loans, banks, lenders, credit, banking industry, securities, dodd-frank

HOW LOANRATENETWORK
LOAN CENTER WORKS
FILL OUT THE FORM
It all starts here. Select the loan product you want to apply for and complete the subsequent questionnaire.
WE VERIFY & TRANSMIT TO LENDERS
Once we receive your completed questionnaire we verify a couple vital pieces of information and direct your information to our network of lenders, all within minutes.
REVIEW YOUR OFFERS
With offers in hand you can now compare rates and costs and get the best possible deal. Comparison shopping made easy. You fill out one form and lenders compete for your business.
CHOOSE YOUR LENDER
Congratulations! With the great learning tools we provide for you at LoanRateNetwork and the offers you have received, you've found the right product and the best rate.
ADVANTAGES OF USING
LOANRATENETWORK
FAST & EASY. DATA ENCRYPTED
Applying to multiple lenders is fast and easy with our one simple questionnaire. Choose the product you’re looking for, take a few moments to answer a few questions and you’re on your way to saving.
NO OBLIGATION. NO HIDDEN FEES
Any of the services on our website are 100% free, there is no obligation to use our services or any hidden fees. We’re not loan brokers so we don’t charge broker fees like other websites.
NO SSN OR CREDIT
CHECK
No SSN or credit check is necessary to use our services. We bring lenders to you so they can compete for your business and you save. That information only becomes necessary after you choose a lender.