Federal Agencies
Browse articles from all of our Newsletters related to Federal Agencies.
May 24, 2013 - Inside MBS & ABS
Analysts: Rumors of Extending HARP Eligibility By One Year Could Strain Servicer Resources
Even as industry chatter increases about an effort to extend the eligibility date of the Home Affordable Refinance Program, analysts speculate that more HARP may be too much of a good thing for the mortgage market. Analysts at Bank of America Merrill Lynch and Keefe, Bruyette & Woods cite evidence of a “creeping goal line” to move back by 12 months the June 1, 2009, cut-off date for HARP eligibility. KBW cites a Saturday morning address by President Obama earlier this month on the subject of refinance. “While he did not specifically mention extending HARP, we think an announcement could be coming over the next few weeks to extend the eligibility back one year,” said KBW. More telling, said BAML, is...
May 24, 2013 - Inside MBS & ABS
Bank MBS Investment Continued to Shrink in Early 2013, But Hold Steady in Agency MBS
Banks and thrifts saw another drop in their MBS holdings in the first quarter of 2013 despite holding their own against the Federal Reserve’s voracious appetite for agency MBS. A new Inside MBS & ABS analysis of bank and thrift call reports reveals that industry investment in residential MBS fell 1.1 percent during the first quarter of 2013 to $1.562 trillion. That was down 4.4 percent from the record $1.634 trillion of MBS held in portfolio by banks and thrifts at the end of the first quarter of last year. Banks reported...[Includes two data charts]
May 23, 2013 - Inside Mortgage Finance
Credit Agency Reporting Glitch Creating Foreclosure Woes for Short-Sale Borrowers
The lack of a specific computer code for reporting short-sale mortgage transactions is creating numerous false reports of foreclosure on consumer credit reports, inhibiting their re-entry into the housing market, according to lawmakers on Capitol Hill and consumer advocates. Earlier this month, Sen. Bill Nelson, D-FL, dispatched letters to the Federal Trade Commission and the Consumer Financial Protection Bureau citing the “disturbing” consumer credit reporting practice of lumping short sale within the same industry code as a foreclosure in consumers’ credit reports. “If a short sale is reported...
May 23, 2013 - Inside Mortgage Finance
Whichever way the U.S. Supreme Court rules on the constitutionality of presidential recess appointments, the decision would probably cause more uncertainty and turbulence in the industries the ruling will likely affect, according to legal and policy analysts. SCOTUS is considering a petition filed last month by the Obama administration and the National Labor Relations Board to review a controversial ruling by the District of Columbia Court of Appeals that calls into question the validity of President Obama’s appointment of three new members of the board in January. In Noel Canning v. NLRB, the plaintiff challenged...
May 23, 2013 - Inside Mortgage Finance
Bickering in Congress Over ATR Rule and Qualified Mortgages Continues, Legislative Changes Unlikely
Republicans and even some Democrats in the House are calling for significant changes to the Consumer Financial Protection Bureau’s ability-to-repay rule, but legislative changes appear unlikely as Democrats oppose most of the GOP proposals. One bill that is furthest along the uncertain legislative process is HR 1077, the “Consumer Mortgage Choice Act,” which would exempt certain fees from the 3 percent cap on points and fees for qualified mortgages under the ATR rule. The bill has 34 co-sponsors, including nine Democrats. Sens. Joe Manchin, D-WV, and Mike Johanns, R-NE, introduced companion legislation in the Senate last week. The bills have...
May 17, 2013 - Inside MBS & ABS
Exactly one year after it filed for bankruptcy, Residential Capital announced this week it has entered into a “comprehensive plan support agreement” with its parent, Ally Financial, and ResCap’s creditors, who say they are owed some $25 billion in mortgage liabilities. The plan gets Ally out from under the threat of billions of dollars in lawsuits by settling all existing and potential claims between Ally and ResCap and all potential claims held by third parties related to ResCap that could be brought against Ally and subsidiaries that are not Chapter 11 debtors. The settlement, which is subject to approval by a federal bankruptcy court in Manhattan, fully releases...
May 17, 2013 - Inside MBS & ABS
Fed Seems One Step Closer to Pulling Back as Market Reps, Analysts Read the Tea Leaves and Prepare
The Federal Reserve’s MBS purchase party isn’t over – yet – but it looks like the nation’s central bank is getting nearer to the last call. Late last week, the Wall Street Journal reported that officials at the nation’s central bank have developed a strategy for dialing back their unprecedented level of support of the housing market. The plan involves reducing the amount of bonds the Fed buys “in careful and potentially halting steps,” the WSJ said, with the purchases varying on the read officials have of the job market and of inflation. And although the timing of the Fed’s wind-down is...
May 16, 2013 - Inside Mortgage Finance
Robust Compliance Strategy Will be Critical in Successfully Navigating the CFPB’s QM Waters
The ability-to-repay rule promulgated by the Consumer Financial Protection Bureau is perhaps the single most important mortgage-related regulation the CFPB will produce under the Dodd-Frank Act, and mortgage lenders will need a vigorous and comprehensive strategy if they are going to make qualified mortgages profitably while maintaining the desired level of legal protection. But before lenders get to the compliance pieces of the QM puzzle, they’ve got to figure out “how to get to QM” and what types of loans they want to make. “We’re assuming...
May 10, 2013 - Inside MBS & ABS
BofA, MBIA Settle Reps and Warranties Claims, Positive for MBIA-Wrapped Non-Agency MBS
Bank of America and MBIA announced a settlement this week of a long-running dispute regarding representations and warranties on mortgages securitized by Countrywide Financial. The settlement benefits non-agency MBS wrapped by MBIA, according to industry analysts. The settlement applies to all outstanding rep and warrant claims and all other claims between the bank and bond guarantor. BofA agreed to pay MBIA approximately $1.6 billion in cash and remit to MBIA all of the outstanding notes in the firm that BofA acquired in December. BofA also will terminate...
May 9, 2013 - Inside Mortgage Finance
Pending Qualified Mortgage Standard May Prompt Shift Toward Monthly Borrower-Paid Premium MI
The three percent points-and-fees cap for qualified mortgages under the Consumer Financial Protection Bureau’s ability-to-repay rule is likely to push the private mortgage insurance industry away from products that emphasize upfront premiums and towards products built on monthly premiums. As the rule stands now, borrower-paid, non-refundable upfront MI premiums would be included in the points-and-fee calculation, but borrower-paid monthly MI premiums would not. There are two caveats: lenders may also exclude...
May 9, 2013 - Inside Mortgage Finance
Next Round of G-Fee Hikes Could Pull More Private Capital, But May Force Other Changes
Most mortgage industry observers expect the Federal Housing Finance Agency to raise Fannie Mae and Freddie Mac guaranty fees by about 20 basis points this year, but many are convinced that the impact on market practices may be bigger than the magnetic effect on private capital. The FHFA has said it wants to raise g-fees to the point that private capital comes into the market, according to Paul Mullins, a senior vice president and interim head of single-family at Freddie Mac. During remarks at the secondary market conference sponsored by the Mortgage Bankers Association this week, he said “The odds are reasonably good you will see higher guaranty fees.” Already around 50 bps and twice their historic level, the fees charged...
May 3, 2013 - Inside Nonconforming Markets
CFPB Clarifies Non-Agency QM Standards
In response to concerns from industry participants, the Consumer Financial Protection Bureau recently issued proposed clarifications to its ability-to-repay and servicing rules. The proposal includes changes to underwriting standards for non-agency “qualified mortgages.” The debt and income ratio standards for non-agency QMs were included in Appendix Q of the ATR rule. The standards were largely based on the FHA’s underwriting process. “The bureau has received numerous inquiries ...
May 3, 2013 - Inside MBS & ABS
Despite Concerns, Repos Continue to be a Good Funding Source for MBS, Other Asset Classes
Repurchase agreements remain an important source of funding for agency MBS, collateralized mortgage obligations and other asset classes despite continued concerns about liquidity and regulatory risks, according to a Fitch Ratings analysis. As of March 2013, an estimated $1.83 million in assets were financed by the U.S. tri-party repurchase market, according to Fitch analysts Martin Hansen, Robert Grossman and Kevin D’Albert. The analysts noted...
May 3, 2013 - Inside MBS & ABS
More of the Same from the Fed When it Comes to Housing Market, Rate Support via MBS Purchases
There were no real surprises this week from the Federal Open Market Committee, which announced it plans to continue purchasing additional agency MBS at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. But observers continue to contemplate the Fed’s eventual exit strategy and how it will affect the markets. “The committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS in agency MBS and of rolling over maturing Treasury securities at auction,” the FOMC said in what is becoming standard, boilerplate language. “Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.” Also, the committee plans...
May 2, 2013 - Inside Mortgage Finance
Qualified Mortgage Eligibility Issues Still Concern Lenders Even as CFPB Provides Clarity Elsewhere
The high-profile ability-to-repay rule and its “qualified mortgage” standard issued earlier this year by the Consumer Financial Protection Bureau is still a work in progress, as mortgage lending industry representatives continue to work the regulators for additional changes and clarifications before the January 2014 implementation. Last week, in meetings with CFPB personnel, officials from the Mortgage Bankers Association pressed for changes and additional guidance on the final rule. The CFPB recently issued a proposed rule to clarify a number of issues related to the January ATR rule. Many of the issues the trade group raised last week were not addressed...
April 25, 2013 - Inside MBS & ABS
Standard & Poor’s this week deployed legal countermeasures against the federal government by asking a judge to dismiss a civil fraud lawsuit brought against the rating agency, slamming the litigation as an “overreach.” In February, the Justice Department filed a $5.0 billion lawsuit against S&P accusing it of knowingly inflating its ratings on residential MBS and collateralized debt obligations to boost its revenue and market share in the years leading up to the 2008 financial crisis. The filing in California federal court by S&P’s parent company, McGraw-Hill Co., says...
April 25, 2013 - Inside Mortgage Finance
Likely Collision Between HUD Disparate Impact Rule And CFPB ATR Rule Leaves Industry in Quandry
Potentially conflicting federal regulations over mortgage lending practices and standards from different government agencies increasingly appear to have the industry in a damned-if-you-do, damned-if-you-don’t position. During a webinar on fair lending challenges this week sponsored by Inside Mortgage Finance, Melanie Brody, a partner at K&L Gates, highlighted one of the challenges the industry faces in navigating between the Department of Housing and Urban Development’s new discriminatory effect rule and the Consumer Financial Protection Bureau’s ability-to-repay rule. “The problem is that ability-to-repay and qualified mortgage requirements add up...
April 25, 2013 - Inside Mortgage Finance
After Rushing to Meet Dodd-Frank Deadline, CFPB Proposes Changes to Clean Up its ATR Rulemaking
The Consumer Financial Protection Bureau late last week issued a proposed rule to clarify a number of issues about qualified mortgages and other aspects of its ability-to-repay final rule promulgated in January that is set to take effect in early 2014. The agency proposed to clarify a key issue regarding the QM status of loans originally securitized by Fannie Mae or Freddie Mac, or insured by the FHA or VA, that are later subject to repurchase demands. Lenders have been concerned that such loans might lose their automatic QM status as agency loans, but the CFPB said they will not. “The fact that a [government-sponsored enterprise] or agency demands...
April 19, 2013 - Inside FHA Lending
DOJ Announces SCRA Lawsuits, Settlements
The Department of Justice recently announced enforcement actions against a New York-based FHA lender and its owner/president for fraudulent certification of FHA-insured loans as well as two separate settlements with bank subsidiaries for alleged violations of the Servicemembers Civil Relief Act. In the first action, the U.S. Attorney for the Southern District of New York, the Department of Housing and Urban Development, and the HUD Office of the Inspector General jointly announced a civil mortgage fraud lawsuit against ...
April 19, 2013 - Inside Nonconforming Markets
A former managing director and global head of structured credit in the investment banking division of Credit Suisse Group pled guilty last week to a scheme to hide losses on non-agency mortgage-backed securities. Kareem Serageldin faces a maximum sentence of five years in prison and a maximum fine of the greater of $250,000 or twice the gross gain or loss from the offense. The Department of Justice had charged Serageldin with fraudulently inflating the prices of non-agency MBS and ... [Includes four briefs]
April 19, 2013 - Inside Nonconforming Markets
CFPB Proposes Changes to Subprime Escrow Rule
The Consumer Financial Protection Bureau this week proposed changes to a final rule issued in January to remove an inadvertent gap in protections for borrowers receiving higher-priced mortgages and tweak the definitions of “rural” and “underserved” areas. The proposed changes relate to a final rule on escrow requirements for higher-priced mortgage loans. Lenders are currently required to establish escrow accounts for certain HPMLs for a minimum of one year. The CFPB’s final rule generally ...
April 18, 2013 - Inside MBS & ABS
The Industry Wins a Few Key Decisions in Ongoing Litigation Over MBS, But Also Takes Some Lumps
Issuers of non-agency MBS won two key court battles against federal agencies because the regulators’ suits to recover losses suffered by failed institutions came too late. Last week, the U.S. District Court for the Central District of California rejected all claims the Federal Deposit Insurance Corp. brought against Countrywide Financial related to 10 MBS certificates sold to the failed Colonial Bank. “All of the FDIC’s claims are time-barred,” the court said. In FDIC v. Countrywide, the court said...
April 18, 2013 - Inside MBS & ABS
Non-Agency MBS Market Off to Its Best Start In Two Years, Jumbo Plays Significant Role
The non-agency MBS market produced $8.33 billion in new transactions during the first quarter of 2013, its strongest issuance in nearly two years, and did so the old-fashioned way by relying heavily on “new” prime jumbo mortgages. The first three months of 2013 saw nearly a threefold increase in non-agency MBS issuance compared to the previous quarter and was 65.1 percent ahead of the pace set in 2012, according to a new analysis and ranking by Inside MBS & ABS. Although over half the issuance volume was in re-securitizations and deals backed by servicer advances, the most encouraging sign was the continued rebound in prime jumbo MBS production. Redwood Trust made good...[Includes three data charts]
April 18, 2013 - Inside Mortgage Finance
District Court Allows Class Action on Captive Reinsurance to Proceed Against Lender, MIs
A major mortgage lender and four private mortgage insurance companies – all co-defendants in a class-action lawsuit over captive reinsurance – failed to convince a federal court that the case should be thrown out because the charges were brought well after the timeframe allowed under the Real Estate Settlement Procedures Act. Instead, the U.S. District Court for the Eastern District of Pennsylvania ruled that the mortgage borrowers should have the benefit of “equitable tolling,” which allows plaintiffs to bring cases beyond the normal limits of the law if the defendant actively misled them or the plaintiff was prevented in some extraordinary way from asserting his rights in a timely manner. RESPA generally requires...
April 18, 2013 - Inside Mortgage Finance
Regulators Pressured by Democrats in Congress to Increase Servicer Oversight
Democrats in Congress are putting pressure on federal regulators to increase oversight of servicers due to problems with independent foreclosure reviews and the $25.0 billion national servicing settlement. The regulators have pushed back to some extent while indicating that servicers will be subject to tighter oversight going forward. In 2011, consent orders from the Federal Reserve and the Office of the Comptroller of the Currency required independent foreclosure reviews to be completed by 14 servicers with the help of consultants. In January, most of the servicers agreed to stop the reviews and alternatively provide $8.5 billion in relief to borrowers. The regulators acknowledged...
April 18, 2013 - Inside Mortgage Finance
CFPB Compliance Guide on ATR Rule Leaves Large Lenders Chomping at the Bit for Guidance
The Consumer Financial Protection Bureau last week issued a small-entity compliance guide on its groundbreaking ability-to-repay rule promulgated in January. It’s a document that may help smaller firms but leaves big players wanting more. “Our goal with this guide is to provide a comprehensive rule summary in a plain language and Frequently Asked Questions format, which makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff,” the CFPB said. The bureau recommended...
Webinars
Industry Reports
Poll
Most Popular Stories
- Caliber Enters the Correspondent Channel, Taps PennyMac Executive
- Springleaf Readies Latest Non-Agency MBS, S&P Notes Lower Default Risk, Weak Enforcement Mechanism
- No Private Right of Action Under HAMP, Appellate Court Rules
- Home-Equity Market Still in Doldrums Despite Small Climb in Bank Unfunded Commitments
- JPMorgan Dumps Mortgage Brokers from USDA Loan Program
