HousingWire – Kerri Ann Panchuk
Congress enacted the Dodd-Frank Act three years ago to remedy lending excesses that took root before the financial meltdown. But the real outcome of this intervention is a modern mortgage market where big banks can no longer lend to lower and lower-middle class borrowers, banking analyst Dick Bove with Rafferty Capital Markets said Monday.
The effect of this development is the creation of a two-tiered housing finance system, where lower-income homeowners have fewer options, the banking analyst said. As a result, the market is now dominated by upper middle-class and upper-class borrowers, Bove suggested.
So even if the Dodd-Frank regulations were toted as remedies designed to help struggling Americans and protect them from poor lending practices, it has had the adverse effect in recent years. From Bove’s perspective post-Dodd-Frank rules have virtually shut out the least represented borrowers, making the Alt-A product virtually obsolete, Bove told HousingWire.