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Volume 2014 - Number 12

June 6, 2014

ATR Litigation Expected to Be Limited

The Consumer Financial Protection Bureau’s ability-to-repay rule is unlikely to prompt a significant increase in litigation, according to DBRS. The rating service last week released its criteria for non-agency MBS with loans subject to the ATR rule and standards for qualified mortgages. “Although there are no historical ATR claim data to help forecast the rate of borrower challenges, DBRS anticipates that any action against lenders within a securitization trust will be minimal due to the uncertainty of borrower success and significant legal costs that potentially can be incurred.” In addition, third-party due-diligence reviews that confirm ATR compliance and representations-and-warranties obligations that motivate lenders to adhere to underwriting guidelines make litigation less likely, the rating service said. DBRS added...

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HUD has announced a 25 basis point cut in FHA premiums, which is slated to take effect in late January. Is your lending shop for or against a cut in FHA premiums?

For. It should help lending volumes.
Against. The private MI sector should take on this risk, not the government.
Too early to say.
I believe the new White House may scuttle the idea so it doesn’t matter.

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