Dodd-Frank Reform Act of 2010

Dodd-Frank Reform Act of 2010

Wall Street Reform and Consumer Protection Act

The Financial Reform Bill of 2010 could be the final resting place for valuation as well as settlement standards in the US Mortgage Industry for generations to come.

The bill will attempt to bring to consent regulation and control of the valuation process, and the involvement of all parties, including financial institutions. There will be consideration of the positive ideas, and an attempt to mitigate the negative market affects from recent HVCC, USPAP, and HUD efforts to regulate valuation.

The idea is a defined and understood valuation method for US residential properties, and a method that correlates with international finance standards.

With good fortune over the coming months there will be transparency with regard to regulating the use of appraiser valuation products, perhaps set new rules for appraisal reviews, a more organized effort to reinforce appraiser independence, and enforcement of compliance among all parties of the lending and finance processes as related to valuation.

With cooperative efforts by the international private sector, and the ability to focus within our legislative bodies here in the US, the year 2011 will optimistically provide mechanisms of mortgage finance the ability to rely once again more fully on not only property valuation in the US, but also settlement, insurance, lending practice, securitization, derivatives, and congruency with international monetary laws.

The potential affects upon the world from a positive outcome of the Financial Reforms of the US are staggering. If the world financial markets feel secure with the US Housing sector as being stabilized through affective legislation, the possibility the mortgage securitization being a great tool of credit availability for consumers might emerge again in the US, and EU.

As the bill has just passed into law Summer of 2010, not much clarity exists until Fall 2010. There is an initial stipulation that the laws related to appraisal revisions be finalized 1 year from the date passed into law. (7/16/10-7/16/11)

The comprehensive 2000 page bill looks to clarify the world standards related to all parties involved in the valuation process, potentially including the following:
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  • Effectiveness of various valuation Methods.
  • Cost to consumers for various Methods.
  • Methods by which mortgage lender compensates and selects the appraiser.
  • Differentiation of rural versus urban valuation approaches.
  • Reaffirmation of USPAP precedent and enforcement.
  • Focus upon Appraisal reviews by Appraisers.
  • AMC regulation by state and federal bodies.
  • Reiteration of state licensing standards.
  • Loose ends from past 2 years of HVCC.
  • Mitigation of real estate fraud.
Most US lenders will hold with generally applying their existing interpretations of HVCC to valuation disciplines within their lending divisions. As clarity emerges over coming months, and in 2011 finality has taken place hopefully, US lenders and financial institutions will begin replacing HVCC as it sunsets by 2012.

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