set up the dominoes for the mortgage meltdown, not only did they cover their behinds after the meltdown by sponsoring a slew of new regulations that make the mortgage industry less competitive, but they also created a new opportunity for mortgage fraud.
One of Frank and Dodd's post-crisis changes to the Truth In Lending Act gives borrowers the ability to rescind with no obligation mortgage security loans (home equity lines of credit, etc.) up to three days after closing. In the case of rescission, the lender must return to the borrower all loan settlement fees. See how this creates an easy opportunity for fraud? Take, for example, an unscrupulous appraiser who colludes with a like-minded borrower. In the course of the loan settlement, the borrower pays the lender for an appraisal, who pays the appraiser. Then, the borrower rescinds the loan, and the lender refunds the appraisal fee. The appraiser, who has already completed the appraisal, has no obligation to return his fee to the lender! The appraiser and the borrower split the stolen money. This "service triangle" scam could be repeated again and again with any loan settlement provider.
A government-created fraud market. Just like the energy credit market. Thanks again, Frank and Dodd!