Dodd/Frank Act--An Investor's Analysis

Dodd/Frank Act #2--Overview
Overview—(Note: The following information is a summary of the Dodd/Frank Act, (Reference: http://www.gpo.gov/fdsys/pkg/PLAW-111publ203/pdf/PLAW-111publ203.pdf ), a U.S. Regulation that is in initial implementation as of this writing. Note that there is no case law precedent to reference, so investors are encouraged to be cautious and thorough in dealing with the tenets of these regulations.
Passed in 2008 as the impact of the U.S. Financial collapse was affecting the entire world, this bill was well-intentioned in attempting to prevent a recurrence, but probably deals more with some symptoms than the actual causes. Nevertheless, it is designed as a consumer protection in the issuance of mortgages (by institutions or private lending) that tightens qualifications for borrowers and gives power of enforcement to borrowers who were not carefully screened regarding their ability to repay the loan.
The Dodd Frank legislation will affect investors in two areas: 1) The ability of consumer buyers to obtain qualified conventional mortgages will be more difficult, and this can make it more challenging to find an end buyer (owner-occupant) for properties; 2) Investors engaging in private lending (including offering properties using any seller finance method) will need to require more buyer qualification procedures, and add specific disclosures to their owner-occupant buyers or borrowers.
Penalties for not complying with Dodd Frank regulations will primarily not be enforced by government, but instead will result in lawsuits initiated by unhappy buyers and borrowers, who will claim that their lender did not properly screen their ability to repay the loan, and the court can award three years of previous payments on the loan plus down payments back to the borrower. It is very likely that predatory attorneys will exploit this opportunity.
Like many things in life, we can bemoan the inconvenience of these new statutes, or look for opportunity. There are potential huge opportunities to be found in learning how to work with these new standards as an investor, solving problems for buyers and sellers.

For more posts in this thread, go to:
http://www.deangraziosi.com/real-estate-forums/financing-and-credit/1511...