by Mark A. Calabria
Cato Institute
February 03, 2014
Working Paper Series
The Dodd-Frank Act institutes the most significant changes to the federal oversight of mortgages in at least 20 years. Much of the details, however, have been left up to financial regulators, with the new Consumer Financial Protection Bureau playing a leading role. While the proposed Qualified Mortgage and Qualified Residential Mortgage rules will likely increase the cost of mortgage credit, particularly due to increase litigation, compliance and foreclosure costs, their impacts on reducing foreclosures during the next housing bust are likely to be modest and may even increase foreclosures. Despite the significant changes in Dodd-Frank to the mortgage market, those features of the American mortgage market most relevant to the financial crisis, such as lack of market discipline, remain unaddressed and in many cases have been made worse. The only certainty appears to be continued uncertainty and tension in the federal regulation of mortgage finance.

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