Mortgage Reform and Anti-Predatory Lending Act

Although it has received far less attention than other titles of the Dodd-Frank Act (the "Act" or "Dodd-Frank"), such as those addressing derivatives, "too big to fail," risk retention and the Bureau of Consumer Financial Protection, Title XIV of the Act, which prescribes a host of new standards for residential mortgage loans, is among the most far-reaching of the legislation. Title XIV creates consumer protections significantly more stringent than those promulgated by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") which became effective in October 2009 relating to "higher-priced mortgage loans." The Act greatly increases originator's loan underwriting burdens and will create inevitable incentives for lenders to only offer prime quality "vanilla" loan products. Indeed, the Act will likely have the effect of reducing credit availability to the non-prime lending sector.