A new era of regulatory reformation has begun, a period of compliance-driven lending with greater enforcement, replacing an era when reluctant regulators were slow to enact new consumer protection laws.
From July 2008 through May 2009, the US Congress and US federal regulators have enacted new or modified more mortgage lending industry laws and regulations than at any time since the early years of the Great Depression.
The Housing and Economic Recovery Act of 2008 will prove to be the most important new law that solidifies government mortgage-finance institutions and provides greater information transparency and protection for consumers.
Government initiatives to assist mortgage borrowers in default will have a positive impact but ultimately will assist only a minority of delinquent borrowers and by themselves cannot fix the credit crisis.
Unintended consequences of legislative and regulatory action will include redefaults of poorly conceived loan modifications, conflicts between laws that overlap, and slower lending processes bogged down by inadequately trained staff.
The new laws and regulations will continue to be a catalyst for IT spending growth in regulatory compliance, risk management, loan collections, and consumer protection and data management.
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