If You Thought Banks Are Being Conservative, Just Wait

Remember Dodd-Frank? Of course you do. That's the Act that was passed in 2009 that according to one law firm, requires that regulators create 243 new rules, conduct 87 studies and issue 22 periodic reports. (See report).    

Some of those new rules pertain to the development of so called "qualified" mortgages.  The rule is supposed to rid us once and for all of negative amortization loans, interest only loans and no income check loans - you know, all those loans that supposedly put us in the dog house back in 2008.  Pay no attention to the fact that those loans were available for many, many years without any problems.  It was only when Wall Street learned they could sell God awful loans within packages of good loans that the housing market was brought to its knees  It certainly was NOT the availability of some creative loans.

The Consumer Financial Protection Bureau (doesn't that sound like they have your best interest at heart?) is the regulatory body that will be responsible to draw up new definitions of what lenders can do with their mortgage offerings  And no less than 33 lobby groups have warned the CFPB that restrictive interpretations of said "qualified" mortgages will be another blow to the weak housing market.

So how strict will they be?  Here's my guess - no negative amortization, no "teaser" rates, no interest only loans and no no income check loans.  Just like we have today.  Hmmm.  Of course most housing markets in the country are still stuck in neutral.  Why don't we just keep it that way until someday, another politician decides its time to open things up again.  But that won't happen until we are first forced to sit through more of this agony.