The regulatory burden of the Dodd-Frank Act creates pressure on community banks to hire additional compliance staff instead of customer-facing staff, reducing resources that could be directly applied to serving a bank’s customers, resulting in fewer mortgages getting made, slower job growth and a weaker economy, according to Steve Wilson, the American Bankers Association’s immediate past chairman. The Dodd-Frank provisions he cited as particularly troubling for community banks include risk retention, higher capital requirements, narrower qualifications for capital, and doubling the size of the deposit insurance fund – taking as much as $50 billion out of the earnings and capital of the industry in the process. “The Dodd-Frank Act also requires 20 new Home Mortgage Disclosure Act reporting obligations,” Wilson said in a speech last week. “These and other reporting requirements will add considerable compliance costs to every bank’s bottom line.”

Calls increased last week for Republicans in the Senate to drop their opposition to an up-or-down vote on President Obama’s nomination of Richard Cordray to be the first director of the controversial Consumer Financial Protection Bureau. What’s noteworthy is that one Republican in the Senate, Scott Brown from Massachusetts, broke ranks with the rest of his party in saying he supported the nomination. Brown may be feeling the political heat of his challenger for the Senate seat he holds, Harvard professor Elizabeth Warren, the architect of the CFPB and the first special advisor to the Treasury hired to get the new bureau up and running after its creation by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Consumer Financial Protection Bureau is about to begin its Consumer Risk Assessment process, one of the key components of the agency’s Supervision and Examination Manual. This process evaluates CFPB-supervised entities based on the amount of risk their activities pose to consumers, identifies the various sources of risk, and assesses the quality of risk controls they’ve put in place. This process is definitely something that those who have been concerned about the expansive powers of the bureau should ready themselves for, according to attorneys in the mortgage banking and consumer financial products practice at the law firm of K&L Gates.

The Consumer Financial Protection Bureau, in a conciliatory gesture to a wary industry, recently announced the existence of a formal Early Warning Notice process that will provide advance notice of potential enforcement actions to individuals and firms under investigation. The process is modeled on similar procedures that have been successful at other federal agencies, according to the CFPB. It starts with the bureau’s Office of Enforcement explaining to individuals or firms that evidence gathered in a CFPB investigation indicates they have violated consumer financial protection laws. Recipients of an Early Warning Notice are then invited to submit a response in writing, within 14 days, including any relevant legal or policy arguments and facts. The Early Warning Notice process “strikes a balance between the goal of fairness to those being investigated and our mission to protect consumers,” said Raj Date, special advisor to the secretary of the Treasury for the CFPB. “This process will help us fulfill our commitment to transparency in enforcing the law.”

The Government Accountability Office recently confirmed the view widely held in the mortgage finance industry that federal regulators are not doing enough to analyze the cost and other effects of implementing the Dodd-Frank Act. “Little is known about the actual impact of the final Dodd-Frank Act rules, given the short amount of time the rules have been in effect,” the GAO said. The government watchdog noted that federal financial regulators are required to perform a variety of analyses, but the requirements vary and none of the regulators are...

A proposed Senate bill to steadily wind down Fannie Mae and Freddie Mac over the course of a decade appears to have some support at the Federal Housing Finance Agency, where the acting director is eager for Congress to move toward resolving the three-year-old conservatorships of the two government-sponsored enterprises. S. 1834, the Residential Mortgage Market Privatization and Standardization Act of 2011 would gradually reduce the two GSEs over 10 years through an unusual mechanism. Instead of guaranteeing the entire MBS trust as they...

Mortgage real estate investment trusts, along with investors, urged the Securities and Exchange Commission to maintain certain exemptions for mortgage REITs or risk further housing finance issues. REITs are seen as key in efforts to reduce the federal government’s current support of mortgage finance. “Mortgage-focused real estate investment trusts, such as Redwood, are well-suited to carry out this key mortgage banking business function,” said Andrew Stone, general counsel for Redwood Trust. “However, these companies need to continue to be able to rely on the [SEC] exclusion in order to efficiently and effectively carry out...

Three new housing professionals have joined the Department of Housing and Urban Development’s Single Family, Risk Management and Multifamily offices. Sarah Garecke was named senior policy advisor in the Single Family Office and will help organize the new Office of Housing Counseling. She was previously with the Furman Center for Real Estate and Urban Policy at New York University’s School of Law, where she launched the Institute for Affordable Housing Policy. She also co-authored the Directory of Affordable Housing Programs.