The Effects Of The Dodd Frank Act On The U.S. Real Estate Financial Market And Its Implications

Under the environment of low mortgage rate since 2002,the U.S.commercial banks continued to lower the threshold for loans,and the securitization rate has increased year by year.As the mortgage rate rose,the default rate of mortgage loans has soared,resulting in the subprime crisis in the United States in 2007.After the subprime mortgage crisis,the United States carried out a large-scale financial regulatory reform,with the “Dodd-Frank Act” as a sign.Therefore,after the introduction of background of the Dodd-Frank Act,this article begins with looking into the U.S.real estate financial market problems,including two aspects of primary market relaxing the standards of loans and secondary market's high securitization rate leading to high risk.After reading and studying the “Dodd-Frank Act”,the article finds terms that may have effects on the real estate financial market.These terms could be divided into four parts,which are about residential mortgages,securitization,credit rating supervision a nd the reform on Freddie Mac and Fannie Mae.Due to query on the Act from various sides including the Trump Government,regarding the Act as an obstacle for the U.S.economy,especially for financial industries like commercial banks,the article studies further to evaluate whether the Dodd-Frank Act is a failure just as the criticism said.Based on the terms found,the article looks up amounts of data and a large amount of reports,and specifically analyzes whether the Dodd-Frank Act had an impact on and solved the US real estate financial market problems.The analysis shows that the Act has some effects on raising the threshold of mortgages and improving supervision of the credit rating agencies,however,it does not have obvious impacts on other perspectives.In addition to the quantitative and qualitative analysis on term-effects,the article adopts multiple regression to analyze the effectiveness of the Act on controlling real estate market risk of the United States,by using the U.S.macroeconomic data,including unemployment rate,mortgage rate,housing loans,and debt/income ratio,and by comparing the delinquency rate before and after the Act.Empirical analysis shows that the Act can improve the recognition of real estate market risk and made regulations on the real estate market stricter,and therefore does control the U.S.real estate financial market risk.The article intends to provide suggestions for perfecting real estate financial market in China,by studying the effects of the Dodd –Frank Act on the U.S.real estate financial market and finding the effective measures to solve real estate market problems and control real estate market risk.Based on the analysis and empirical study of how the Dodd-Frank Act affected real estate financial market,combined with the analysis of current situation of real estate financial market in China,the paper puts forward some suggestions on improving real estate financial market in China from the aspects,which are improving the efficiency of the system,implem enting the risk retention and exemption,strengthening the mortgage loan indicator system and strengthening the supervision of the credit rating agency.