What Is Dodd Frank?

What is Dodd Frank? As note investors we often hear that we need to be compliant with Dodd Frank. In short, the Dodd Frank Act, formally known as the Dodd Frank Wall Street Reform and Consumer Protection Act, which also created the Consumer Financial Protection Bureau (CFPB), is targeted at regulating the financial industry and protecting consumers.


After the height of the great economic recession, in 2010 the Act was signed into law to improve transparency and accountability within the financial system, prevent fraudulent financial services and protect consumers from predatory lenders and banks. These previously unregulated practices were attributed as some of the causes of the great recession.


What does this have to do with notes? Well, note holders are the “bank” and many of us create notes or have an RMLO originate them. There are some exceptions laid out in the Dodd Frank regulations when it comes to loan origination, land and commercial property.


Most importantly, there are harsh penalties for violating the law. You could be sued for violations and be on the hook for reimbursed attorneys’ fees and costs, penalties of up to $5,000.00 a day, $25,000.00 for reckless violations, and $1,000,000.00 per day for knowing violations in some cases.


If that’s not enough, you could also be ordered to do a rescission or reformation of the contract, refund the borrowers costs, return any interest paid and return the actual property to name a few. Be sure to read up on the laws and regulations of Dodd Frank, RESPA, Truth in Lending Act and the SAFE Act when dealing with notes and mortgage origination.


For more information on notes or if you have notes to sell, reach out to Zee at Awanna Renovation & Holdings, LLC (571)659-5005.


©Awanna Renovation & Holdings, LLC (Jan 2020-2), zee@awannarandh.com/www.awannarandh.com

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