Dodd-Frank Act

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

October 24, 2014 - Inside MBS & ABS

Final Rule Setting Risk-Retention Requirements For Non-Agency MBS Features Broad Exemptions

Six federal regulators approved a final rule this week setting risk-retention requirements for residential MBS transactions, exempting the entire agency MBS universe and non-agency securities backed by qualified mortgages. There is not that much left. The risk-retention requirements for residential mortgages will take effect one year after the final rule is published in the Federal Register, which is expected shortly. Regulators opted to align the definition for qualified-residential mortgages with the standards established by the Consumer Financial Protection Bureau for QMs. The sponsor of a non-agency MBS that includes non-QRMs will have to retain at least 5.0 percent of the balance of the security, as required by the Dodd-Frank Act. In 2011, federal regulators proposed...


October 23, 2014 - Inside Mortgage Finance

Change in Control of Capitol Hill Could Spur Some Legislative Activity; GSE Reform Still Lacks Traction

If Republicans take control of the U.S. Senate in the upcoming elections, Congress next year may actually produce some mortgage-related legislation, according to political analysts participating on a panel at the Mortgage Bankers Association’s annual convention in Las Vegas this week. Any successful legislation will be narrowly targeted and not address complex problems like building a new mortgage finance system or resolving the status of Fannie Mae and Freddie Mac, analysts agreed. Over the last four years, the Democrats’ top priority has been preserving...


October 16, 2014 - Inside Mortgage Finance

CFPB Throws Industry a Few Bones on TRID Rule; Are There More to Come and, If So, Exactly When?

The Consumer Financial Protection Bureau last week proposed two narrow revisions to its complex mortgage origination disclosure rule, leaving the industry guessing what further changes could come as lenders gear up to implement a massive rule known as TRID: the Truth-in-Lending/Real Estate Settlement Procedures Act integrated disclosure. For most lenders, the most significant proposed change would relax the requirement that lenders provide a revised loan estimate on the same day that a consumer’s rate is locked. After considering industry feedback, CFPB staff concluded that such a short turnaround may be challenging for lenders that allow consumers to lock interest rates late in the day or after business hours. This could mean...


October 13, 2014 - Inside the CFPB

Dodd-Frank Rules Uniquely Affecting Manufactured Housing

The CFPB issued a report earlier this month finding, more often than not, that owners of manufactured homes pay higher interest rates for their loans than borrowers whose homes were built onsite. “In 2012, about 68 percent of all manufactured-housing purchase loans were considered ‘higher-priced mortgage loans,’ compared with only 3 percent of site-built home loans,” the CFPB said. Two out of three manufactured-home owners eligible for mortgages finance with more expensive personal property (“chattel”) loans instead. That’s good and bad. On the one hand, chattel loans have lower origination costs and quick closing timelines, as the bureau noted. But on the other hand, they also have “significantly fewer consumer protections than mortgage loans,” the bureau said. For example, only ...


October 3, 2014 - Inside MBS & ABS

SEC Urged to Do More to Reform Credit Rating Process, Shopping By Issuers Remains a Problem

“Rating shopping is alive and well,” Calvin Wong, chief credit officer at Morningstar Credit Ratings, said last week at the ABS East conference in Miami Beach. The Securities and Exchange Commission recently released a rule setting new requirements for the rating services, but Wong warned that the SEC hasn’t done enough to address the issue. He said...


September 26, 2014 - Inside FHA Lending

FHA Announces $336 Million Recovery for MMIF

An estimated $336 million out of a $614 million settlement that JPMorgan Chase agreed to pay for not complying with FHA requirements will go towards stabilizing the agency’s ailing Mutual Mortgage Insurance Fund. On Feb. 4, 2014, the U.S. Attorney’s Office for the Southern District of New York took over a whistleblower lawsuit and started an investigation of Chase on behalf of the government for alleged violations of the False Claims Act. The whistleblower or “relator” alleged that Chase, an approved FHA direct endorsement lender, had not followed FHA requirements when underwriting loans, causing the MMIF to incur significant losses when the borrowers defaulted on their loans. The U.S. Attorney filed suit against Chase based on the results of an audit conducted by HUD’s Inspector General that looked into the bank’s underwriting and refinancing of FHA loans. The lawsuit alleged that ...


September 26, 2014 - Inside MBS & ABS

Cautious Optimism in Structured Finance Market As New Regulations Ease Compliance Uncertainty

Investors are comfortable with broad swaths of the structured finance market and issuers are cautiously optimistic that regulators won’t hinder activity too much going forward, according to attendees at the ABS East conference produced by Information Management Network this week in Miami Beach. “We’re in a pretty good spot right now in the market from a supply-demand perspective,” said Bob Behal, a principal and co-head of ABS investments and commercial MBS investments at Vanguard Group. Almost 3,700 people had registered by the start of the conference, up slightly from around 3,500 people in 2013. Will Zak, a director at Barclays, said...


September 25, 2014 - Inside Mortgage Finance

Congress Acts to Extend Info-Sharing Privilege to State-Licensed Mortgage Companies, State Agencies

Last week, the Senate passed legislation that would extend to state-licensed mortgage companies – and the state regulatory agencies that oversee them – the same kind of protections against waivers of privilege for information provided to the Consumer Financial Protection Bureau that was previously extended to federal agencies that supervise depository mortgage lenders. The measure, H.R. 5062, the Examination and Supervisory Privilege Parity Act of 2014, would require the CFPB to coordinate its supervisory activities with state agencies that license, supervise or examine those who offer consumer financial products or services. Currently under the Dodd-Frank Act, the bureau is only required to coordinate with federal and state banking regulators. The legislation also would provide...


September 18, 2014 - Inside Mortgage Finance

Experts Say Tougher Legal Liability Under TILA Is One of the Treacherous Shoals Awaiting Under TRID

Among the many challenges associated with the Consumer Financial Protection Bureau’s pending integrated disclosure rule is expanded legal liability for lenders based on the more threatening Truth in Lending Act, as opposed to the more palatable liability framework of the Real Estate Settlement Procedures Act. During a webinar sponsored last week by Inside Mortgage Finance, Rich Horn, a partner with the Dentons law firm and one of the architects of the rule while a regulator at the CFPB, noted there is no private right of action for integrated disclosures under RESPA. On the other hand, with TILA liability, “there is...


Poll

What is it going to take to convince lenders to loosen the credit box (i.e., remove underwriting overlays)?

The recent rep and warranty changes announced by the Federal Housing Finance Agency should go a long way in protecting lenders from future buybacks and help expand mortgage credit.
There won’t be any significant elimination of underwriting overlays until the government stops seeking huge mortgage-related penalties and settlements from lenders.
There shouldn’t be any expansion of the mortgage credit box since looser underwriting is what caused the recent mortgage crisis.

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