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Trump unveils plan to dismantle Dodd-Frank Act
“Bureaucratic red tape and Washington mandates are not the answer”
Now that the dust is starting to settle from the election, a clearer picture is beginning to emerge of what types of actions President-elect Donald Trump will pursue once the “-elect” is removed from his title.
Chief among those planned actions appears to a plan to “dismantle” the Dodd-Frank Wall Street Reform Act.
Trump’s plans for the first days of his term as president are being revealed on a website launched by his transition team.
Under a section titled “Make America Great Again,” the website lists the three main tenets of Trump’s plan: Making America Secure Again; Getting America Back To Work Again; and Government for the People Again.
Each of those main sections has several subsections, and those in the financial services industry should pay close attention to the “Getting America Back To Work Again,” as it contains much of Trump’s plan for the economy.
“Financial markets are vital to the American economy. Capital markets bring investors together with creators to fund new ideas and fuel economic growth,” the website reads under a subsection entitled “Financial Services.”
“Banks and other lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” the website continues. “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.”
The Trump website then goes on to discuss the impact of the Dodd-Frank Act, and how the Trump administration will work to replace it.
The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including the Consumer Financial Protection Bureau.
“The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression,” the website states.
“Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether,” the website continues. “Economic growth remains below 2%, about half the historic average. The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail.’”
In the words of the Trump transition team, Dodd-Frank and the economy it fostered “does not work” for America.
“Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”
One of the main issues that many have with Dodd-Frank is the amount of regulations that the law place on the financial services industry.
Trump’s website doesn’t provide any additional details on how President Trump will go about dismantling Dodd-Frank, but the website does also contain a separate section entitled “Regulatory Reform,” which is called a “cornerstone” of the Trump Administration.
According to the website, Trump’s regulatory reform effort, which he spoke about often on the campaign trail, includes: “a temporary moratorium on all new regulation, canceling overarching executive orders and a thorough review to identify and eliminate unnecessary regulations that kill jobs and bloat government.”
The Trump Administration is “committed to regulatory reform that will produce sensible regulations that allow America to be great,” the website states.
As HousingWire previously reported, there’s already a Republican-led effort underway in Congress to repeal and replace Dodd-Frank and many of its regulations.
Earlier this year, House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, introduced a bill in the House that would replace Dodd-Frank with a “pro-growth, pro-consumer” alternative that would bring significant reforms to the CFPB, and much more.
The bill, called the Financial CHOICE act, passed out of the House Financial Services Committee in September.
The bill would “end taxpayer-funded bailouts of large financial institutions; relieve banks that elect to be strongly capitalized from ‘growth-strangling regulation’ that slows the economy and harms consumers; and impose tougher penalties on those who commit fraud as well as greater accountability on Washington regulators.”
Again, it’s unknown how Trump will accomplish the dismantling of Dodd-Frank, but Christopher Whalen, the senior managing director of Kroll Bond Rating Agency, is already predicting that pursuing the Financial CHOICE Act, or some version of it could be one of Trump’s first moves as president.
“Changing the narrative regarding Dodd-Frank and related regulations is not a simple task,” Whalen wrote in a post-election note. “That said, addressing Dodd-Frank and related issues is a lot simpler than either tax reform or fixing the (Affordable Care Act.)”
Whalen says that KBRA’s “decidedly speculative bet” is that Trump will back a modified version of the Financial CHOICE Act that would be altered to make it more “palatable” to the Senate.
Despite Democratic opposition to any proposed changes to Dodd-Frank, Whalen writes that changes to Dodd-Frank could be much more easily accomplished that changes to the tax code, or repealing Obamacare.
“We note that Rep. Hensarling is very close to Vice President-elect and Indiana Governor Mike Pence from the latter’s days in Congress, and that Hensarling even travelled with the campaign,” Whalen writes. “KBRA notes that there are a number of other issues that may catch the attention of the new President next year, but for our money passage of an amended version of the CHOICE Act has the highest probability of success in 2017. Needless to say, the financial services industry would be very supportive.”
article in today’s Housing Wire Newsletter
National REIA Applauds US District Court Ruling Upholding Fourth Amendment that Protects Property Owners from Unnecessary Gov’t Harassment
Cincinnati, Ohio) The National Real Estate Investors Association (National REIA) issued a statement today applauding the U.S. District Court’s (Southern Ohio) recent decision stating that the city of Portsmouth’s (Ohio) occupational licensing requirements, which are imposed upon landlords violates the Fourth Amendment to the United State Constitution.
Charles Tassell, Chief Operating Officer of National REIA said “Today’s ruling laid bare the excuses used by local governments to steal the freedoms of property owners.”
He further added that “The 4th Amendment is still alive and well, and citizens should NOT be forced to have their homes intrusively ‘inspected’ by warrantless searches. Every local government should take note that warrantless searches are STILL illegal and unconstitutional.”
Regarding the ruling itself, Tassell said “The ruling won by the 1851 Center For Constitutional Law was a victory for freedom against a tyranny with which the Founding Fathers were all too familiar. Citizens of the United States have an expectation to live without local, state or federal inspection of their home based on flimsy excuses disguised as law.”
Judge Susan Dlott, of the Western Division of the Southern District of Ohio, held as follows: “[T]he Court finds that the Portsmouth [Rental Dwelling Code] violates the Fourth Amendment insofar as it authorizes warrantless administrative inspections. It is undisputed that the [Rental Dwelling Code] affords no warrant procedure or other mechanism for precompliance review . . . the owners and/or tenants of rental properties in Portsmouth are thus faced with the choice of consenting to the warrantless inspection or facing criminal charges, a result the Supreme Court has expressly disavowed under the Fourth Amendment.”
For more information and to read a copy of the the Court’s ruling visit www.realestateinvestingtoday.
September 3, 2015 4:49PM
In total, Fannie Mae increased the maximum number of allowable days for a foreclosure sale for 33 states, effective for foreclosure sales on or after Aug. 1.
Fannie Mae made the announcement Thursday in an email to its servicers.
According to the announcement, Fannie Mae increased the maximum number of allowable days for the following jurisdictions: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Nevada, New Mexico, New Hampshire, Oklahoma, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.
As part of its servicing guide, Fannie Mae establishes time frames under which it expects routine foreclosure proceedings to be completed.
According to Fannie Mae, the maximum number of allowable days takes represents the maximum allowable time lapse between the due date of the last paid installment and the completion of the foreclosure sale.
The allowable time frame also signifies the time typically required for what Fannie Mae calls a “routine, uncontested” foreclosure proceeding.
The allowable time frame reflects the legal requirements of the applicable jurisdiction, and takes into consideration delays that may occur outside of the control of the servicer, Fannie Mae said.
If the number of days to complete a foreclosure sale exceeds stated maximum number of allowable days and the servicer does not provide an adequate explanation to Fannie Mae as to the reasons for the delay, Fannie Mae requires the servicer to pay a “compensatory fee.”
According to Fannie Mae, the list of “reasonable explanations” includes:
- Military indulgence
- Contested foreclosure
- The mortgage loan is currently in review for HAMP
- The mortgage loan is in an active mortgage loan modification trial plan or unemployment forbearance
- Recent legislative, administrative, or judicial changes to existing state foreclosure laws, provided that the servicer is diligently working toward resolution of the delay to the extent feasible
Fannie Mae noted in its announcement that there is currently a compensatory fee moratorium for Washington D.C., Massachusetts, New York and New Jersey and stated that the moratorium will last, “at a minimum,” until Dec. 31.
Hey Mike I hope you & your family are ready for the Holidays
I purchased you Landlord on Auto Pilot course great stuff & have used it on
all my rentals with much success.
Ran across a new renter they are very interested in my new home.
He ask if I would consider corporate lease.
He said his company would pay for his rent monthly or give him the money to
I looked through your course & did not see anything on how to handle
Therefore, use the residential lease.
PRIVITY OF CONTRACT:
Who Is Making Repairs For Your Buyer?
The #1 post closing question we get asked is this: “the sellers agreed to repair the (roof, electrical, plumbing, etc.) and now we’ve moved in and the (roof, electrical, plumbing, etc.) isn’t fixed. Can we go back to the seller and make them do the work properly?”
Under MOST situations, the answer is NO!!!
Huh? You mean it’s ok the seller didn’t have the work properly done as they agreed they would do? Yep, that’s exactly what we’re saying. And here’s why.
In Kentucky there’s a legal concept called “privity of contract.” Privity of contract says if I didn’t enter into a contract with a contractor directly, and if the contractor does a crummy job, the contractor is not liable to me.
Therefore, when a buyer requests a seller to make certain repairs after the home inspection, the way most agents handle the situation, there would NOT be privity of contract because the seller picks the contractor, not the buyer.
In addition, when a buyer allows the seller to pick the contractor, we know the seller will likely pick World’s Cheapest Contractor, LLC to do the work. This only increases the odds the buyer will have an issue after closing.
So, how do we fix this?
We’d love to say “insist on your buyer picking the contractor,” but we don’t think that’s realistic. Instead, as a selling agent, we’d suggest when you’re dealing with Big Ticket Items (roof, HVAC, basement, structural issues, electric, plumbing), you reach out to the listing agent BEFORE making a repair request and ask them who they are likely to use for this work. If you are comfortable the person doing the work is qualified, in the repair request specifically state the seller shall use [insert name of qualified contractor listing agent suggested] and state specifically “buyer’s name shall appear along side the seller’s name on the invoice.” If you are NOT comfortable with the contractor they suggest, you need to write in the repair request the contractor your buyer would like to use for the work. In this case, you will still need to add “buyer’s name shall appear along side the seller’s name on the invoice.”
When the buyer’s name appears on the invoice, we now have privity of contract.
If an issue pops up after closing, the buyer can now go back to the contractor to insist the contractor take care of the problem. And at the same time, we’re now using a contractor we feel good about.
Another alternative would be to have the seller give the money for all repairs directly to buyer, but this should NEVER happen without the buyer’s lender’s consent. Of course, in a cash closing, it’s fine to give money directly to the buyer, but not if there’s a lender involved.
We hope your summer has been fun and productive and we hope to see you soon at a closing table!
Since the early 1970s, our firm has practiced primarily in the field of real estate law. We represent banks and mortgage companies, real estate investors, builders and individual buyers and sellers in a variety of transactions related to residential and commercial real estate in Kentucky and Indiana. Our primary area of practice is real estate closings. However, our attorneys also practice in other areas of law as well.
DODD FRANK FOR TODAY’s INVESTOR
by attorney Harry Borders
PART TWO- RESTRICTIONS ON OWNER FINANCING!!!
Here’s the GOOD NEWS… Investor buyers can STILL get financing from any source they want.
Here’s the TERRIBLE news… Owner occupant buyers now have lots of restrictions place on who they can get a loan from.
These new rules impact “contract for deeds” and “Land Contracts” as well as seller retained mortgages (and, of course, the ever present contract for deed in disguise as a lease-option) and private financing.
So, assuming an owner occupant wants to obtain a loan from a source other than a bank or mortgage company, here are the new rules.
If the lender only lends once in a 12 month period, the lender:
a) MUST be a “natural” person (i.e. not an LLC or corporation);
b) MUST have owned the property (i.e. no private financing, only owner financing);
c) MUST NOT have built the home in the ordinary course of his/her business;
d) MUST NOT have a negative amortization;
e) MUST be for at least 5 years, and if longer and adjustable, must be tied to an index rate, such as Libor
If the lender lends 2 to 3 times in a 12 month period, the lender MAY be an LLC or corporation. But the lender also:
a) MUST have owned the property (i.e. no private financing, only owner financing);
b) MUST NOT have built the home in the ordinary course of his/her business;
c) MUST NOT have a negative amortization;
d) MUST be FULLY AMORTIZED;
e) if the rate is adjustable, it must be fixed for at least 5 years, and it must be tied to an index rate, such as Libor; and
f) MUST determine in good faith that the consumer has a reasonable ability to repay the loan (similar to what a loan officer would do).
If the lender lends more than 3 times in a 12 month period,
all of the above requirements for a lender lending 2 to 3 times in a 12 month period apply and
IN ADDITION, the lender MUST BE A LICENSED LOAN OFFICER.
As you can see, navigating the waters of seller financing has again become tricky.
Please check with your real estate attorney before embarking on a seller financing transaction for a dwelling.
Until next time, peace,
P.S. Your simple solution to stay out of trouble is to never offer seller financing to any tenant / buyer or owner occupant. You can use Seller Financing to sell to other Investors, not owner occupants.