February 3, 2012
Latest from Inside Mortgage Finance
Total originations rose by 19.4% since the previous quarter according to Inside Mortgage Finance
White House Details Refinance Program That Needs Congressional Action, May Have Limited Impact
President Obama this week called on Congress to enact legislation to refinance non-agency borrowers through the FHA, to be paid for by large financial institutions, and to force Fannie Mae and Freddie Mac to be more accommodating. Most observers say the proposals stand little or no chance in the bitterly divided Congress, and that they might have little more success than earlier FHA refi programs for non-FHA borrowers. Under the latest proposal, borrowers with conforming-balance loans not financed by the government-sponsored enterprises would be able to get refi loans from the FHA. To be eligible, the...
Qualified Mortgage Rule Is CFPB’s Top Priority, Latest Round of Disclosures Come as Project End Nears
Consumer Financial Protection Bureau Director Richard Cordray this week confirmed to members of Congress that the agency’s top mortgage regulatory priority is its forthcoming rule on qualified mortgages – something it expects to finalize this summer. Separately, the agency last week quietly complied with a disclosure practice that all other federal entities involved in rulemaking follow: the release of a regulatory agenda. The CFPB filing, after officials bickered with House Republicans last week over the issue, does not include several key projects, such as devising rules on unfair and deceptive practices...
Industry Groups Raise Concerns About Timing of Key Mortgage Regulations
The six federal agencies that have to respond to massive protests over a proposed qualified residential mortgage definition have offered little guidance on their next step, one that industry groups say is critical given its interaction with a separate rule that sets standards for qualified mortgages that show the borrower has the ability to repay a loan. “We will probably see a QM rule before a QRM rule,” said Joseph Pigg, senior counsel at the American Bankers Association. “Getting six regulatory agencies to agree will make QRM a longer process,” he noted. The QM/ability-to-repay rule is under...
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Inside FHA Lending
Industry Leery of President’s New Refi Plan
The mortgage industry is skeptical about President Obama’s proposal for low-cost, non-agency loan refinancing program, administered by the FHA for current, underwater borrowers. Some industry participants called the plan nothing but smoke and mirrors that would likely create unrealistic expectations. But deceptive or not, the proposal first announced by the president in his State of the Union address promises to be different from the earlier, huge unsuccessful FHA experiments in foreclosure prevention – Hope for Homeowners and FHA Short Refinance programs. The proposed refi plan is a combination of ...
Inside Nonconforming Markets
Economics of Non-Agency Securitization Still Unfavorable, Regulation Uncertain
Issuance of new non-agency mortgage-backed securities will resume when the financing structure is economical, according to attendees at the American Securitization Forum’s ASF 2012 conference last week in Las Vegas. Just what it will take to make non-agency securitization economical remains to be seen, though some suggest that regulatory uncertainty plays a major factor. “We have not seen much of a test of the non-agency market because it’s not economical,” said Peter Sack, a managing director and co-head of real estate and mortgage finance at Credit Suisse. “The bank portfolio bid is strong.” ...
Inside MBS & ABS
Both the Federal Housing Finance Agency and Freddie Mac are refuting a published report suggesting that a mortgage finance vehicle at one time employed by the government-sponsored enterprise was designed to profit the company by preventing homeowners from refinancing. An article published this week by ProPublica and National Public Radio contended that Freddie stood to profit from hedging investments known as inverse floaters that would pay higher returns if interest rates rose and more homeowners remained in mortgages with high interest rates. According to ProPublica, Freddie purchased inverse floaters...
Inside The GSEs
Experts: Elections to Paralyze GSE Reform
Expect the run up to the fall elections to curb any meaningful results in terms of a legislative overhaul of Fannie Mae and Freddie Mac. However, industry insiders say it’s quite likely that lawmakers will work through the year to tweak various GSE reform proposals for the next Congress to take up in 2013.
As Congress resumed this week following the holiday break, members returned to some 14 bills in the House advancing their way through committee – though only a couple are considered “comprehensive” reform legislation. Meanwhile, two bills filed at the end of last year in the Senate got the other chamber of Congress into the GSE reform debate after a long dormancy.
Inside Mortgage Trends
Housing Market May Finally Touch Bottom, But Agencies Still Dominate
Securitization experts are expecting a rerun of last year in 2012, as the U.S. economy slowly rights itself and most segments of the asset-backed securities market generate reasonable new issuance and stable performance. While observers suggest the housing market may make only modest improvement this year, no one expects much non-agency mortgage activity. Growth in issuance of non-agency mortgage-backed securities is going to be very slow, said Ron Mass, co-head of structured products at Western Asset Management Co. Because the market is underwriting the mortgage borrower, and no longer relying...
Inside Regulatory Strategies
Do Exam Procedures Tilt Against Nonbanks?
The newly empowered Consumer Financial Protection Bureau is wasting no time jumping into its oversight of mortgage origination practices and procedures at banks and nonbanks alike, issuing a set of M.O. examination procedures that will be used to put mortgage lenders and brokers under a compliance magnifying lens. But one industry attorney warns that in doing so, the CFPB has tilted the playing field against nonbank mortgage originators. CFPB Director Richard Cordray said the CFPB’s supervision of nonbank mortgage originators will “illuminate the entire marketplace by making nonbanks play by ...
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