Yipee, the election is finished! No more Dodd-Frank, no more CFPB, no more TRID.
Out of the above statements, only one we know for sure is true: the election is over. I have friends on both sides of the aisle who are convinced one or more of the other three statements are also true with the election of Donald Trump. Let’s take a look at some real possibilities of what might happen and how these things will play out down the road.
First of all, it’s essential to have any meaningful conversation about the future of the financial and mortgage industries that we put the campaign rhetoric aside.
In every election I have ever seen come to pass, both sides have made unrealistic promises to appeal to voters to gain the vote. Based on my decade of experience in Washington DC, fifty years of voting experience, and the opinions of others I highly respect, converting these promises into reality is far more difficult that we give it credit for.
Let’s take a look at those three leading statements and evaluate their likelihood.
Dodd-Frank Wall Street Reform and Consumer Protection Act – This piece of legislation was the result the financial meltdown created by a completely dysfunctional mortgage market and its lending policies. It was signed into law in 2010 by President Obama and provided for consolidation of regulatory agencies, consumer protection reforms, a “resolution regime,” among other things. Given the impact of Dodd-Frank on the financial industry, I don’t expect it to be repealed. It’s just too massive. I do, however, expect modifications around its edges that favor Wall Street and large financial entities, giving them some relief from what they feel to be too-stringent regulatory outlines. This process will inevitably take some time and I don’t see it happening right away.
Consumer Financial Protection Bureau (CFPB) – One might have made a case for some serious modifications to the Consumer Financial Protection Bureau until the Wells Fargo fiasco this year, the PHH decision notwithstanding. As such, I don’t see this agency going anywhere soon. That said, Director Richard Cordray’s term is over in 2018 and there has been much conversation implementing an appointed five-person board to reign in the Agency, or in the very least, appointing a new director. There’s a chance Cordray could be on his way out next year, but almost certainly will be when his term expires in 2018. I see modest change coming, but certainly not the complete elimination of the CFPB.
TILA / RESPA Integrated Disclosure (TRID) – This is the easiest one to predict. Billions of dollars have been spent to adapt to TRID and thus this functional mandate is going nowhere. In reality, other than the enormous expense implementing TRID levied on the mortgage industry, it has been in place over a year now with few problems. We have seen almost no TRID violations being pursued by the CFPB; there’s really no reasonable cause for going after it for now.
So, where does that leave us as we move forward? I suspect that massive change is not on the horizon, but certainly shifts will take place. I suspect they will primarily favor the financial industry, large financial institutions in particular. For the smaller players in the industry, things probably won’t change all that much. What change does happen will take time, as it is very difficult to alter massive regulation that’s already in place, requiring multiple levels of governmental approval. In general, I see the industry remaining healthy with slightly-eased guidelines that lead to slowly increasing rates.