Solano Real Estate Scene: Dodd-Frank rollback affects Main Street

The recent legislation passed by Congress and signed by President Donald Trump will reduce some of the compliance costs burdening credit unions, community-based banks and Main Street mortgage bankers. “We lose about a credit union a day, and it’s mostly because of the regulatory burden,” said Dan Berger, CEO of the National Association of Federal Credit Unions. The huge Wall Street banks that employ 150,000 to 250,000 employees have had an easier time covering the cost of compliance than my parent company that employs 1,800 employees or most credit unions that employ fewer than 1,000 people. The cost of compliance since the crash of 2008 and Dodd-Frank is 10 times what it used to be prior to the Great Recession for most smaller banks, mortgage companies and credit unions. Ironically, the credit unions and the local community-based banks were victims of the Wall Street behavior between 2003-07 when market values dropped by 50 percent in 2008 and great people who never had a blemish on their credit reports suddenly found themselves doing short sales or forced into bankruptcy or foreclosure. These institutions weren’t selling unaffordable adjustable-rate, stated-income residential mortgage loans to clients and members and then selling them to Lehman Brothers and Countrywide. They were not doing loans for folks who they knew were likely to default. Local Main Street lenders didn’t artificially inflate home values by making it possible for a buyer to buy a brand-new house for $800,000 with absolutely nothing down and no provable income. Wall Street banks put their heads in the sand while they allowed outsiders into our neighborhoods in middle-class areas like Solano County and take advantage of our consumers. The good news is Ameriquest is out of business along with Countrywide and Lehman Brothers and, maybe just as important, the boiler-room mortgage companies out of places like Irvine and Miami, Florida, can’t send mailers out to my clients, friends and family falsely advertising fixed-rate mortgages at 1 percent when they are really 6 percent with negative amortization.