Friday, July 23, 2010

"The Dodd-Frank Wall Street Reform and Consumer Protection Act" - Some Residential Mortgage Provisions

H.R. 4173

The Dodd-Frank Wall Street Reform and Consumer Protection Act - was signed into law by President Obama on July 21, 2010 as Public Law 111-203. It contains various residential mortgage provisions.

Section 4 - General Effective Date - one day after enactment

Section 941 - Regulation of Credit Risk Retention - Regulations are to be prescribed "to require any securitizer to retain an economic interest in a portion of the credit risk for any asset that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party." The securitizer is also to be prohibited from "hedging or otherwise transferring the credit risk that the securitizer is required to retain" and the securitizer is to be required to retain not less than 5 percent of the credit risk for certain assets.

Section 1001, et seq. - The Consumer Financial Protection Act of 2010.

Section 1400, et seq. - The Mortgage Reform and Anti-Predatory Lending Act

Section 1411 - Ability to Repay - The Truth in Lending Act (15 U.S.C. 1631 et seq.) is amended that, in accordance with regulation, creditors may not make a residential mortgage loan unless it makes a "reasonable and good faith determination based on verified and documented information that, at the time the loan is consummated, the consumer has a reasonable ability to repay the loan, according to its terms, and all applicable taxes, insurance...and assessments."

Section 1442 - Establishment of Office of Housing Counseling

Section 1446 - Study of Defaults and Foreclosures - HUD is to conduct an extensive study of the causes of default and foreclosure of residential home loans, including the role of escrow accounts and the role of "computer registeries of mortgage" (that must refer to MERS)

Section 1471 - Property Appraisal Requirements

Section 1482 - HAMP Guidelines - the HAMP supplemental directives and other guidelines are to require the mortgage servicer to provide the borrower whose request for mortgage modification is denied, "all borrower-related and mortgage-related input data used in any net present value (NPV) analyses". The input data is to be provided "at the time of such denial." A website is to be established to provide a calculator of the NPV analyses of a mortgage so that a homeowner can enter the information regarding their own mortgage and make a determination regarding whether their mortgage would be accepted or rejected for a HAMP modification.

Section 1483 - Public Availablity of HAMP Data

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