The Impact of the Regulatory Rollback on Homebuyers

Smaller banks may be relieved at loosening lending rules, but some experts say that the rollback of certain aspects of the Dodd-Frank banking reform bill will increase risk and endanger consumers.

Scott Astrada, the director of federal advocacy at the Center for Responsible Lending, says “There’s going to be a strain to find more exotic products to offer borrowers ... That increases the likelihood that consumers will get stuck in riskier or unaffordable mortgages.” The bill's supporters counter that regulatory requirements made it more costly for smaller banks and credit unions to engage in mortgage lending, and that many had stopped altogether, Realtor.com reports.

The Senate approved a bill last week that will roll back some aspects of the Dodd-Frank banking reform bill, which was passed in 2010 after the financial crisis. It will make many small and midsize banks exempt from parts of Dodd-Frank. The bill was sponsored by Mike Crapo, a Republican senator from Idaho. It will now move to the House, where it could be amended further.

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