What are the regulatory restrictions on leverage?

A; I believe that this was begun back during the first Bush's admin and B, typical of any regulatory agency, they are inept at notifying/educating about upcoming reg's and then expect everyone to comply.

Custodians do exactly the same thing but with the added regulatory and financial scrutiny.

If I go to a bank I can expect my lender to be at least at the same level of sophistication and under regulatory requirements that my or a bank would be subject to, that's why I deal with banks and not loan sharks on a street corner. 

I am trying to read all of the source documents as well to get a better understanding of the area's regulatory environment.

While the interest rates were the "easy reach", I believe the greater issue is the interpretation of regulatory law.

Another thing to consider is coming new change in Snohomish county land that will directly impact SFR zoning and that's nearing the end of the regulatory pipeline: This new regulation will lower the required land square footage to build duplexes in residential neighborhoods down to the same as for a single family home, instead of 150%.

For example, the owner owns to infinity but the feds took the use of the title holder's air rights for aviation, in an area that has no zoning an owner probably controls up to 100 feet without getting into regulatory matters.The Grantor owner grants easements for various reasons and uses, the owner still owns the land, but the easement is described, in you case a roadway easement, this grants a hole through the owner's property, it's like a tunnel, above the surface with widths described and 100 feet high unless the owner's rights are further limited by law. 

Who originates a mortgage matters, the borrower is entitled to somewhat of an implied warranty dealing with an institutional lender that their loan will be treated as required under that institution's regulatory requirements, subsequent holders treat the note under the requirements of that type of note, for example; an FHA loan will be subject to FHA requirements, a HELOC from a state bank will fall under FDIC, a private loan from an individual falls under state law. 

It's such a small operation I doubt it will impact much, but I agree with @Fernando Parker that the credit counseling and other financial education could be the bigger success.Banks are now so limited to what they can do (I can't even imagine all the regulatory red tape they have to deal with!)