Dodd-Frank Replacement Financial CHOICE Act

Dodd-Frank took years to formulate and pass into law; and then it took years for the mortgage industry to figure everything out.  Just as the mortgage industry has settled in to Dodd-Frank, Republicans want to replace it!  The replacement Republicans have come up with is the Financial CHOICE Act which the Democrats have nicknamed the WRONG Choice Act.  

Democrats on the House Financial Services Committee held a hearing and not surprising no Republicans showed up-gridlock at it’s finest. A Dodd-Frank replacement received new life with the election of Donald Trump as some argue Dodd-Frank prevents lenders from lending.  Other’s argue by saying that simply is not true.  ThDodd-Franke truth is, according to supporters of Dodd-Frank, is that lenders are able to lend and just look at the rise of personal debt since Dodd-Frank enactment as proof.  House Democrats are against a repeal and want the Republicans to join them in reforming the current law.  

To be clear; Dodd-Frank does not determine how low mortgage interest rates can go or how high they can go.  Dodd-Frank is a post-2008 financial crisis law that dictates various things including proper lending guidelines and disclosures.  While it does require residential mortgage lenders to justify and document the mortgages they provide; some people are under the wrong impression that Dodd-Frank has a direct influence over mortgage rates.

Representative Maxine Waters is a vocal critic of the repeal and she said at the hearing:  “We’ve asked for this second hearing to hear from experts and well-informed witnesses who know, understand and appreciate the importance of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and who can point out the dangers of the Wrong Choice Act,” Rep. Maxine Waters (D-Calif.) said. “Now, even with this additional hearing, we cannot fully cover all of the many ways this bad bill would hurt hardworking Americans. We would need dozens more hearings to do that. But with this slate of outstanding experts here today, we will have the opportunity to educate the public about some of the harmful repercussions of the Wrong Choice Act.”

Republican’s are falsely claiming that Dodd-Frank protects the banks and not the consumers which simply is not true.  Dodd-Frank and the CFPB have brought about significant improvements when it comes to protecting borrower’s looking for a new mortgage.  The CFPB has done a decent job in going after mortgage companies for false advertising and illegal kick backs which also helps consumers by filtering out the “bad apples” in the mortgage industry. While not perfect; Dodd-Frank does a good job however it does need to be reformed to ensure that it works for those that it’s supposed to protect and doesn’t impede their ability to obtain financing.