Dodd-Frank Act

Browse articles from all of our Newsletters related to Dodd-Frank Act.

February 17, 2017 - Inside Nonconforming Markets

Revised CHOICE Act Aims to Limit CFPB

A revised version of the Financial CHOICE Act could make changes to the Consumer Financial Protection Bureau that are so significant that other provisions in the bill aiming to loosen standards for qualified mortgages might not be necessary. Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, introduced HR 5983, the Financial CHOICE Act, in September and the committee approved the bill largely on a party-line vote that month. The bill covered a wide ...

February 17, 2017 - Inside MBS & ABS

Replacing DFA Mortgage Rules Without Replacing Them Threatens RMBS Credit Quality, Moody’s Says

Weighing in on President Trump’s recent executive order related to the Dodd-Frank Act, analysts at Moody’s Investors Service said ditching the major mortgage regulations promulgated under the law would be negative for residential MBS unless it’s done carefully. “Any significant repeal of the Dodd-Frank Act’s mortgage-related provisions without effective alternatives would weaken residential RMBS credit quality because these provisions have strengthened the credit quality of mortgage originations, improved servicing practices and bolstered the credit integrity of RMBS structures,” the analysts said in a new report issued earlier this week. Their report then detailed...

February 16, 2017 - Inside Mortgage Finance

CHOICE Act 2.0 Would Disembowel CFPB, Hensarling Would Use Budget to Push Through

A key Republican leader in the House of Representatives is looking to push legislation that would effectively neuter critical aspects of the Consumer Financial Protection Bureau that could lead to major changes in the agency’s oversight functions and capabilities, including mortgage rulemaking, supervision and enforcement. The congressman also indicated he might use a procedural technique related to the budget to ram his legislation past Democrat opponents in the Senate. The legislative vehicle of choice is...

February 13, 2017 - Inside the CFPB

John Doe Co. Action Another Test of CFPB’s Investigative Authority

The unusual recent case of an unidentified finance company filing suit to prevent the CFPB from disclosing its investigation of the firm, and from bringing any action against it unless and until the agency is restructured in line with the U.S. Constitution, is “yet another challenge to the CFPB’s vast investigative and enforcement authority,” according to two attorneys with the Hudson Cook law firm. “This is a new front in the battle against CFPB overreach,” the pair said in a client note. The stakes here can be high. “Companies facing a CFPB investigation often confront a difficult choice of complying with the investigative demand or fighting the CFPB’s authority,” said the attorneys. “But challenging the CFPB is an uphill battle ...

February 13, 2017 - Inside the CFPB

Trump Goes After Dodd-Frank Regulations, CFPB Impact Unclear

President Donald Trump has put the Dodd-Frank Act in his crosshairs, issuing an executive order earlier this month that directs the Treasury secretary to work with the members of the Financial Stability Oversight Council to review the current regulatory regime and evaluate it according to a handful of “core principles” Trump believes should shape the regulation of the U.S. financial system. The principles include fostering informed consumer choices, preventing bailouts, promoting economic growth, tailoring regulations and ensuring regulatory accountability. Industry observers and Republicans and Democrats alike on Capitol Hill saw the order as the beginning of an attack on Dodd-Frank and perhaps even a shot across the bow of the CFPB, with negative implications for the agency’s mortgage lending and ...

February 13, 2017 - Inside the CFPB

CHOICE Act 2.0 Would Retain, Restructure CFPB, Gut its Power

House Financial Services Committee Chairman Jeb Hensarling, R-TX, is looking to retain the CFPB, restructure key parts of the agency, and drastically limit its authority, Inside the CFPB has learned. According to a draft memorandum of the major changes to Hensarling’s Financial CHOICE Act, now dubbed CHOICE Act 2.0, the bureau “is to be retained and restructured as a civil law enforcement agency similar to the Federal Trade Commission, with additional restrictions on its authority,” as follows: Sole director, removable by the president at will. Rule-making authority limited to enumerated statutes. Unfair, deceptive acts or practices authority repealed in full. Supervision repealed. Consumer complaint database repealed.• Market monitoring authority repealed. Enforcement powers limited to cease-and-desist and civil investigative demand/subpoena powers....

February 10, 2017 - Inside MBS & ABS

Higher Interest Rates May Prompt Banks to Unload Fixed-Rate Product, Result in Fewer GSE Refis

Analysts at DBRS anticipate some notable changes in the residential mortgage securitization market this year, mostly as a result of expected higher interest rates. “Despite a healthy housing market recovery, post-crisis non-agency RMBS issuance has remained stagnant for several reasons,” said Quincy Tang, managing director of RMBS structured finance, in a new research report issued early this week. In addition to the dominance of Fannie Mae and Freddie Mac and bank balance-sheet capacity, “a persistently low interest rate environment has rendered...

February 10, 2017 - Inside MBS & ABS

Industry Supports Trump Review of Dodd-Frank; Will There Be a Repeal of ATR, QM, QRM?

Industry observers and groups expressed support this week for President Trump’s move to put the Dodd-Frank Act under the microscope, with an eye toward scaling back its regulatory burden and possibly replacing at least parts of it with more pro-market reforms. Late last week, Trump signed an executive order that directs the Treasury secretary to consult with the heads of the agencies that comprise the Financial Stability Oversight Council, review the current regulatory structure for the U.S. financial system, and report back in 120 days. The order also lays...

February 10, 2017 - Inside MBS & ABS

MBS and ABS Sectors Adjusting to Risk-Retention Requirements, Some Avoiding Horizontal Option

Risk-retention requirements for the majority of MBS and ABS sectors were in effect by the end of December, and industry participants have largely adjusted to them, according to analysts. The Dodd-Frank Act generally requires sponsors of ABS, non-agency MBS and commercial MBS to retain at least 5.0 percent of each deal. The retention requirements for residential mortgages took effect at the end of 2015, though most deals have been backed completely by qualified mortgages, which makes them exempt from risk retention. Other asset types have...

February 3, 2017 - Inside MBS & ABS

SFIG Lays Out Securitization Reform Priorities as Republicans Plan to Repeal/Replace Dodd-Frank Act

With Republicans looking to repeal the Dodd-Frank Act and pass new standards that will impact MBS and ABS, the Structured Finance Industry Group recently reviewed areas for reform along with how industry participants can push for changes. The review was completed by SFIG staff and Lewis Cohen, a partner at the law firm of Hogan Lovells. “It would be a mistake to assume that a simple repeal of Dodd-Frank would be sufficient to address many of the regulatory frictions that have impeded the use of securitization to provide funding and create growth in the real economy,” SFIG said. While MBS and ABS participants have long pushed for a loosening of the mandatory risk-retention requirements set by the DFA, SFIG said...

January 30, 2017 - Inside the CFPB

Other News in Brief

Republicans Again Introduce Legislation to Change CFPB Leadership Structure to a Board. Republican Sens. Deb Fischer (NE), Ron Johnson (WI) and John Barrasso (WY), recently introduced S. 105, legislation that would replace the CFPB’s single-director leadership structure with a bipartisan, five-member board. ... Cordray Assures CFPB Staff Re: PHH Dispute in October Email. In an Oct. 17, 2016, email to “all hands” at the CFPB, a copy of which was obtained by Inside the CFPB, the agency’s director, Richard Cordray, offered some words of reassurance in light of the decision by the three-judge panel of the District of Columbia Circuit Court of Appeals that found the bureau’s leadership structure was unconstitutional. ...

January 30, 2017 - Inside the CFPB

OIG Audits CFPB Use of Vendors to Analyze Fair Lending Compliance

The CFPB Office of Inspector General recently initiated an evaluation of the bureau’s use of vendors to support its analysis of fair lending compliance, the OIG indicated in its latest work plan. The OIG begins by noting, among other responsibilities, the CFPB is charged with providing oversight and enforcement of federal laws intended to ensure the fair, equitable and nondiscriminatory access to credit. But what may surprise many in the industry is to learn that the agency relies on external vendors to help fulfill this responsibility. “Our objective is to assess whether the CFPB effectively mitigates the risk associated with the use of vendors to support fair lending analysis, particularly with respect to potential conflicts of interest,” said the OIG ...

January 30, 2017 - Inside the CFPB

CFPB Tags Citi Subs $29 Million Over Mortgage Servicing Practices

The CFPB last week slapped CitiFinancial Servicing and CitiMortgage a relatively modest $28.8 million for allegedly keeping struggling borrowers in the dark about options available to save their homes. The bureau’s action had to do with the company’s origination and servicing of residential daily simple interest mortgages, especially as they relate to deferments. The CFPB accused CitiFinancial Servicing of misleading consumers about the effect of deferring payment due dates, charging consumers for credit insurance that should have been canceled, prematurely cancelling credit insurance for some borrowers, sending inaccurate consumer information to credit reporting companies, and failing to investigate consumer disputes. The bureau is requiring CitiMortgage to pay an estimated $17.0 million to compensate wronged consumers, and to pay a civil ...

January 30, 2017 - Inside the CFPB

Treasury Sec. Nominee Criticizes CFPB Funding, Eyeballs Dodd-Frank

During his recent nomination hearing before the Senate Finance Committee, Steve Mnuchin, President Donald Trump’s choice to be the next Treasury secretary, took a passing shot at the current funding mechanism at the CFPB. “My biggest issue with the CFPB is that I don’t believe they should be funded with profits from the Federal Reserve,” Mnuchin said in response to a question from Sen. Tom Carper, D-DE. “They should be funded from an appropriations process.” Shortly thereafter, Rep. Maxine Waters, D-CA, the ranking member of the House Financial Services Committee, took issue with Mnuchin for “distinctly” stating that “he wanted to defund the CFPB, our sole watchdog looking out for the interests of students, servicemembers, seniors and other borrowers, and ...

January 30, 2017 - Inside the CFPB

Most CFPB Mortgage Rules Unaffected by Trump Pause

President Donald Trump recently imposed a moratorium on new and pending regulations, which is generally considered by industry experts and observers standard operating procedure for an incoming presidential administration. But the bad news for the mortgage industry is that most of the regulations from the CFPB have already been issued. Two possible exceptions are the bureau’s Home Mortgage Disclosure Act final rule, which has been issued in final form but is not yet effective, as well as its TRID 2.0 clarifying rulemaking, which is expected in final form sometime this spring. In a memo issued by White House Chief of Staff Reince Priebus, unspecified “executive departments and agencies” were generally directed to “send no regulation to the Office of the ...

January 27, 2017 - Inside MBS & ABS

Risk-Retained CMBS Transactions Require More Credit Enhancement than Non-Compliant Ones

Higher capital charges and the cost of capital associated with risk retention mandated by the Dodd-Frank Act will make commercial MBS less competitive with portfolio lending for loans backed by high-quality collateral, according to a new report from Moody’s Investors Service. The report stems from a Moody’s fourth-quarter 2016 analysis of three conduit transactions that were structured to comply with risk-retention prior to its implementation on Dec. 24, 2016. In each of the transactions, issuers retained 5 percent of either the securities or the collateral pool’s cash flows. In addition, the Moody’s report noted...

January 27, 2017 - Inside MBS & ABS

Income-Property Securitization Slowed in 2016 Despite Fourth-Quarter Surge in Production

Securitization of commercial mortgages was down slightly in 2016 as a result of a sharp drop in the non-agency commercial MBS market, according to a new Inside MBS & ABS analysis. Meanwhile, the agency multifamily MBS platforms cranked out record new issuance last year. In total, some $209.03 billion of commercial-property MBS were issued last year, a 3.1 percent drop from 2015. It still ranked as the second most-productive year in commercial MBS issuance since 2007, the year before the financial market meltdown. But non-agency CMBS issuance fell...[Includes one data table]

January 26, 2017 - Inside Mortgage Finance

Trump Imposes a Freeze on New Regulations, Immediate Effect on Mortgage Rules Unclear

The new administration of President Trump wasted no time in trying to fulfill his campaign promise to roll back the tide of regulation, issuing on the day of his inauguration a freeze on new and pending regulations from executive agencies of the U.S. government. What effect this will have on mortgage lending regulation is unclear, at this point, but it’s likely to be temporary, industry insiders agree. According to a memo issued by White House Chief of Staff Reince Priebus, unspecified “executive departments and agencies” were...

January 19, 2017 - Inside Mortgage Finance

Trump Eyes Neugebauer to Replace CFPB’s Cordray, Legal Experts Divided as to Extent of His Authority

What once seemed like an idle speculation – the potential ouster of Richard Cordray as director of the Consumer Financial Protection Bureau – suddenly looks more likely. Last week, President-elect Donald Trump met with Randy Neugebauer, the former Texas Republican member of the House Financial Services Committee, who is under consideration as a replacement for Cordray, according to multiple press accounts. Neugebauer reportedly has not been offered the job, as of press time, nor have other candidates been considered for the position. “I heard...

January 13, 2017 - Inside MBS & ABS

Basel Capital Requirements’ Impact on Non-Agency MBS Activities Uncertain, According to GAO

Capital requirements regarding bank holdings of non-agency MBS increased significantly after federal regulators implemented Basel III reforms in 2014. And while banks have largely been reluctant to re-enter the market for non-agency MBS issuance, a recent report by the Government Accountability Office suggests that the impact of bank involvement in the non-agency MBS market is unclear. The GAO was asked to explain how capital requirements for a mortgage depend on how the loan is financed and how the requirements have changed since the financial crisis. The report was requested by Sen. Richard Shelby, R-AL, who until recently was the chairman of the Senate Committee on Banking, Housing and Urban Affairs. The GAO noted...

January 12, 2017 - Inside Mortgage Finance

As Trump Administration Prepares to Take Reins, New Lineups on Capitol Hill Begin to Take Shape

With the formal transition of presidential power now a mere week away, Congressional Republicans and Democrats alike were busy this week reordering the teams that will take the field for the 115th Congress. Mortgage lenders are hopeful for at least some degree of regulatory relief from the Republican-controlled Congress and White House, but Democrats are vowing to defend the Dodd-Frank Act, one of the signature achievements of the outgoing Obama administration. Republicans in the House of Representatives got...

January 12, 2017 - Inside Mortgage Finance

With PHH Case Pending, Industry Officials Still Believe CFPB Should Give More RESPA Guidance

Mortgage compliance experts say there’s still a strong need for the Consumer Financial Protection Bureau to provide more guidance about acceptable business relations under Section 8 of the Real Estate Settlement Procedures Act. One of the issues that came to the fore in the bureau’s enforcement action against PHH Mortgage was lenders’ relationships under marketing services agreements. Even though banks these days may be using MSAs to a lesser extent than nonbanks, there is still a need for the CFPB to more clearly delineate do’s and don’ts. “On the lender side of the mortgage industry, there is...

January 6, 2017 - Inside MBS & ABS

Freddie Mac Issues Its First Risk-Sharing Security Backed by Seasoned Mortgages

In late December, Freddie Mac issued a $934.27 million security backed by seasoned mortgages. It was the first seasoned credit-risk transfer from the government-sponsored enterprise. While Freddie has issued fully guaranteed securitizations backed by seasoned mortgages, Freddie Mac Seasoned Credit Risk Transfer Trust, Series 2016-1 included tranches without a guarantee from the GSE, similar to a non-agency senior-sub MBS. The transaction included...


With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.
Yes, by a lot.
Yes and, heck, we may even do non-QM lending.
No, not at all.
No and we may even tighten credit.

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