Legislation

Browse articles from all of our Newsletters related to Legislation.

May 20, 2016 - Inside MBS & ABS

Chimera Sees Promise in Risk-Retention Requirements For Non-Agency MBS, Projects Returns in Double Digits

Risk-retention requirements included in the Dodd-Frank Act that met strong opposition from industry participants may turn out to be a profit source for some real estate investment trusts. Non-agency MBS have been subject to risk-retention requirements since the end of 2015, while the rules go into effect at the end of this year for commercial MBS and other asset classes. “I believe...


May 19, 2016 - Inside Mortgage Finance

Banks’ Tighter Underwriting Linked with an Increase in Denial Rates, Lower Delinquencies

A paper recently published by the Treasury Department’s Office of Financial Research detailed links between changes in underwriting standards at banks and the banks’ loan application denial rates and mortgage performance. While the findings are intuitive, the paper from the OFR was the first to match individual lenders’ confidential responses to the Federal Reserve’s Senior Loan Officer Opinion Survey with data from the Home Mortgage Disclosure Act. “We find...


May 19, 2016 - Inside Mortgage Finance

As Lenders Await Son of TRID, CFPB Tries to Give More Clarity With Annotated LE and CD Forms

The Consumer Financial Protection Bureau last week issued annotated versions of the loan estimate and closing disclosure forms that provide citations to the disclosure provisions in Chapter 2 of the Truth in Lending Act referenced in the integrated disclosure rule. However, neither of the two documents appear to go anywhere near providing the kind of clarity the industry hopes to get from the agency’s recently announced new TRID rulemaking. In fact, the documents are more notable for what they do not provide than for what they do. “This document does not include...


May 16, 2016 - Inside the CFPB

Also in Brief: Vendor Update

Industry Vendors Roll Out TRID-Compliant LOS in 50 Days. Three industry vendors, Open Mortgage, LendingQB and International Document Services, partnered to successfully implement a TRID-compliant loan origination system in just 50 days, exceeding their own projections, the companies announced recently. “We knew that our implementation timeline was aggressive, wanting to both implement a new LOS and prepare for TRID within 60 days,” said James Howard, chief technology officer of Open Mortgage, a multi-channel mortgage lender. "Our success was due to having clear implementation plans with our vendors and a team at Open Mortgage that was dedicated to the project,” he added...


May 16, 2016 - Inside the CFPB

Also in Brief: Capitol Hill Roundup

Hensarling Slams CFPB, Vows Big Changes to Dodd-Frank, the Bureau. During a speech last week at the National Center for Policy Analysis, Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, pledged to push a package of pro-growth, pro-consumer reforms as an alternative to the Dodd-Frank Act, including clipping the wings of the CFPB. “At almost every opportunity, the bureau abuses and exceeds its statutory authority, which is already immense,” said the congressman. “The bureau operates with such secrecy, unaccountability, and bureaucratic tyranny it would make a Soviet Commissar blush.” As the committee moves forward with its plans for financial reform, Hensarling promised the Republicans will have ...


May 16, 2016 - Inside the CFPB

Fair Lending in Mortgages Remains Key Issue for CFPB Enforcement

Mortgage lending continues to be a key priority for the CFPB’s Office of Fair Lending for supervision and enforcement, particularly Home Mortgage Disclosure Act data integrity and potential fair lending risks in the areas of redlining, underwriting and pricing, the bureau said in a new report. Last year, the bureau brought to an end two important public enforcement actions that had to do with mortgage lending. The first was a redlining case against Hudson City Savings Bank, which was required to pay almost $33 million in direct loan subsidies, funding for community programs and outreach, and a civil penalty. In this case, the CFPB accused Hudson City of providing unequal access to credit by structuring its business to avoid providing ...


May 16, 2016 - Inside the CFPB

More Homebuyers Reviewing Mortgage Disclosures, ALTA Finds

More homebuyers are reviewing their mortgage documents prior to their real estate closing under the new disclosure regime brought into the marketplace by the CFPB’s integrated disclosure rule, according to the results of a new closing survey by the American Land Title Association. However, there are still issues related to better educating consumers and in terms of the industry’s compliance. “While there remain challenges to complying with the regulation, title and settlement agents went to great lengths to prepare and train staff about the new process,” said Michelle Korsmo, ALTA’s chief executive officer. “The hard work of these professionals paid off as our survey found that 92 percent of surveyed homebuyers are taking time to review their mortgage documents before ...


May 16, 2016 - Inside the CFPB

Did CFPB Botch Another Attempt to Clarify its TRID Disclosure Rule?

Last week, in another apparent attempt to provide the mortgage lending industry with a bit more clarity when it comes to its TRID rule, the CFPB published on its website annotated versions of the Loan Estimate and Closing Disclosure that provide citations to the disclosure provisions in Chapter 2 of TILA referenced in the rule. However, neither of the two documents, which only number 14 pages between the two of them, appear to go anywhere near providing the kind of clarity the industry continues to hope for. According to Kristie Kully and David Tallman, both partners at the Mayer Brown law firm, these so-called “mapping forms” are unfortunately hamstrung by such extensive disclaimers that the bureau might as well have ...


May 16, 2016 - Inside the CFPB

SFIG’s Proposal on TRID Addresses Relevant Risks for RMBS: Moody’s

Analysts at Moody’s Investors Service believe that the Structured Finance Industry Group’s draft proposal on the CFPB’s integrated disclosure rule, otherwise known as TRID, generally is up to the task of addressing the relevant risks for U.S. residential mortgage-backed securities (RMBS), notwithstanding the uncertainty associated with the pending clarifying rulemaking from the bureau. The rule merges the mortgage disclosures mandated by the Truth in Lending Act and the Real Estate Settlement Procedures Act. “SFIG’s draft proposal to standardize the framework for reviewing and grading loans for TILA-RESPA Integrated Disclosure (TRID) rule compliance is adequate to identify those compliance risks that are likely to cause losses to RMBS trusts, aside from one grading provision with which we disagree,” said Moody’s Credit ...


May 16, 2016 - Inside the CFPB

Life Under TRID: Working With Tech Vendors a Big TRID Problem for Many Lenders

Fannie Mae’s Economic & Strategic Research Group surveyed senior mortgage executives earlier this year and confirmed that lenders are still facing challenges in complying with the CFPB’s integrated disclosure rule known as TRID, according to new findings released by the government-sponsored enterprise last week. The controversial rule integrates the consumer disclosure requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act. According to Sheila Teimourian, vice president and deputy counsel at Fannie, more than three-quarters of the lenders surveyed indicated that the two biggest challenges were managing or coordinating with third-party technology vendors and communicating with key players, such as the buyer, seller and loan officer. About eight in 10 of those who cited coordinating with ...


May 13, 2016 - Inside Mortgage Trends

‘EarlyLook’ HMDA Data Show Drop in Denial Rate

A preliminary analysis of 2015 Home Mortgage Disclosure Act reports suggests that loan denial rates declined slightly last year. ComplianceTech, a supplier of fair lending and HMDA technologies for lenders and others, recently released an “EarlyLook” at its online Lending Patterns database of HMDA reports. A group of 175 lenders had a combined $730.9 billion in mortgage originations last year, up 35.7 percent from its volume back in 2014. The 175 aren’t necessarily the ...


May 12, 2016 - Inside Mortgage Finance

Trade Groups Seek Action from Congress on the Future of Appraisal Regulation, Including State Issues, Competition

Trade groups involved in home sales and appraisal issues are calling for a hearing in Congress regarding the future of appraisal regulation. The American Bankers Association, the Appraisal Foundation, the Appraisal Institute, the National Association of Home Builders and the National Association of Realtors made the requests in letters to Congress. …


May 6, 2016 - Inside Nonconforming Markets

New Developments at Leading Jumbo REITs

Announcements by two real estate investment trusts that are prominent in jumbo lending underscore two key themes in the market: increased competition and the lingering headache caused by the TRID disclosure rule. Redwood Trust recently launched an “expanded prime” program known as “Redwood Choice” for correspondent sellers. “The Choice program is a prime program that is fully documented, but with credit parameters outside our more recent underwriting guidelines,” Redwood said. Choice features...


May 6, 2016 - Inside Nonconforming Markets

TRID Guidance to Help Non-Agency, Eventually

After months of pleading by participants in the non-agency market, Consumer Financial Protection Bureau Director Richard Cordray said the agency will issue formal guidance regarding the TRID mortgage disclosure rule. The announcement last week regarding issues involving requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act prompted relief and apprehension among industry participants. And help for the non-agency market doesn’t appear to be moving quickly, as Cordray said the effort will start with a notice of proposed rulemaking in late July. Cordray revealed...


May 6, 2016 - Inside MBS & ABS

New TRID Rulemaking Eases Secondary Market Anxiety, But How Far Will the CFPB Go on Assignee Liability?

Although the Consumer Financial Protection Bureau is still months away from officially clarifying certain parts of its complicated integrated disclosure rule known as TRID, the secondary market – and some attorneys – are already breathing a sigh of relief. But the big question remains: how far will the agency go? And will it provide enough clarity to ease the fears of buyers about being sued for monetary errors? The rule, which integrated consumer disclosures under the Truth in Lending Act and Real Estate Settlement Procedures Act, became...


May 6, 2016 - Inside MBS & ABS

Angel Oak Readies Second Subprime MBS; Will Easing TRID Anxiety Bring More Deals to Market?

Angel Oak Capital Advisors is working on what should turn out to be its second nonprime mortgage securitization of the past six months, a deal that should be similar in size to its first offering of roughly $150 million, Inside MBS & ABS has learned. A source close to the company, who spoke under the condition his name not be used, could not commit to an exact issuance date except to say the security could be issued “soon.” To date, investor interest in the small amount of nonprime/non-qualified mortgage deals that have come to market has been...


May 5, 2016 - Inside Mortgage Finance

Some Nonprime/Non-QM Lenders Get Right With TRID and Expect to Double Production This Year

Like the rest of the industry, the small but growing nonprime sector has struggled with the integrated disclosure rule known as TRID, but for the most part such lenders have adjusted and are now seeing a noticeable increase in both applications and production. At least that’s the view of two of the largest players in the market: Angel Oak Mortgage Solutions, Atlanta, and Citadel Servicing Corp., Irvine, CA. Each firm now expects to fund between $800 million and $850 million this year. They did...


May 5, 2016 - Inside Mortgage Finance

CFPB Relents, TRID 2.0 Coming This Summer As Industry Prepares its Wish List for Changes

After months of public and private criticism and pressure – and perhaps some behind-the-scenes button holing – the Consumer Financial Protection Bureau has decided to yield to the clamoring about its integrated disclosure rule and come out with another rulemaking perhaps as early as late July that will provide “greater certainty and clarity.” Late last week, in a letter to various industry trade groups, CFPB Director Richard Cordray acknowledged that the implementation of the TRID rule poses many operational challenges and is “particularly challenging because of the diversity of the participants” in the industry. He also said...


May 2, 2016 - Inside the CFPB

Other News in Brief

Mortgage Warehouse Volume at Horizon Bancorp Declines in First Quarter, TRID Remains an Issue. Horizon Bancorp announced recently that its mortgage warehouse lending efforts were down in the first quarter of 2016. The bank had $119.88 million in mortgage warehouse loans on its balance sheet at the end of the first quarter of 2016, down 17.2 percent from the previous quarter and down 33.0 percent from the first quarter of 2015.... Flagstar Boosts Originations and Income in 1Q16, Is Comfortable with TRID. Flagstar Bancorp reported an increase in originations and net income for the first quarter of 2016 with company executives noting that the bank is comfortable with the TRID mortgage disclosure requirements...


May 2, 2016 - Inside the CFPB

Mortgage-Related Exams Rose 70 Percent Last Year, CFPB Reveals

It should come as no surprise to mortgage originators and servicers that the CFPB has significantly ramped up its examination activity of their operations over the last year. Data provided exclusively to Inside the CFPB from the bureau per a Freedom of Information Act request reveal there was a 70 percent increase in mortgage-related exams in 2015 from the prior year. As the accompanying chart illustrates, nonbanks have been having an even more active degree of scrutiny from the bureau than have depository institutions. Nonbank originators have seen an 85.7 percent increase in exam activity year over year, versus depositories, which have seen a rise of “only” 42.9 percent during that period. And it is even worse for nonbank servicers. ...


May 2, 2016 - Inside the CFPB

Recent Borrower Surveys Vindicate TRID, Drafter of Rule Believes

A handful of recent surveys of borrowers taking out a mortgage to purchase a home in the new era of the CFPB’s integrated disclosure suggest that borrowers are generally benefiting from the new forms and having a more positive experience with the entire process. Attorney Richard Horn, a former bureau official who was intimately involved in developing the new rule, is pleased to see confirmation that borrowers are getting the kind of benefit from the rule that he and his colleagues at the agency hoped they would. “From my experience, from having led the consumer testing for the disclosures and even the final rule, I do think it’s possible that these surveys are accurate and that consumers are experiencing the ...


May 2, 2016 - Inside the CFPB

CHLA Calls for Balanced Treatment Of Nonbank Mortgage Lenders

In the continuing wake of industry concerns about the TRID disclosure rule and worries about large retroactive fines, the Community Home Lenders Association says the CFPB should provide more balanced regulatory and enforcement policies toward smaller nonbank mortgage lenders and improve compliance guidance and due process. Asserting that nonbank mortgage lenders, including community-based lenders, have recently “led the way” in providing access to mortgage credit and providing more personalized loan servicing, the CHLA said “any regulatory policies that have the effect of imposing a disproportionate compliance burden on smaller lender/servicers can accelerate industry consolidation – which in turn can result in fewer consumer choices and less personalized service.” The trade group had three main recommendations for the bureau, the first of ...


May 2, 2016 - Inside the CFPB

It Was Thought TRID ‘Scratch & Dent’ Market Would Fade. It Hasn’t

The secondary market for mortgages with TRID errors has yet to lose any steam, even though it was anticipated that the action would fade by now. That’s the assessment of Jeff Bode, CEO of Mid America Mortgage, Addison, TX, one of the largest investors in loans with TRID problems. “It’s still pretty solid,” Bode told IMFnews, an affiliated publication. “But I don’t see how much longer it can last.” Bode noted that some of the mortgages he’s reviewing have errors that are so minor he’s surprised that secondary market investors are balking at them in the first place. Mid America buys such mortgages and “makes the cures” itself, the CEO noted. A secondary market for mortgages with TRID errors – jumbos ...


May 2, 2016 - Inside the CFPB

TRID Architect Provides Inside Perspective on Pending Rule

Both the mortgage industry and the CFPB itself may have been caught a bit flat-footed when it came to fully grasping the significance and complexity of the bureau’s TRID integrated disclosure rule, according to one of the individuals intimately associated with drafting the controversial regulation. “TRID is a huge rule, about 1,900 pages of extremely detailed twists and turns. It affects every single aspect of the origination and closing process, as well as liability for lenders and the secondary market,” former bureau official Richard Horn, now an attorney in private practice, told Inside the CFPB. “I think many in the industry had to play catch up these past seven months, trying to grasp the far reaches and complexity of this ...


May 2, 2016 - Inside the CFPB

Life Under TRID: CFPB Relents on Guidance, Preps to Issue Another Rule

After months of hearing mortgage banking and real estate executives gripe about problems tied to the TRID integrated disclosure rule, the CFPB last week signaled its intention to clarify the controversial measure, which became effective in early October. According to a letter from CFPB Director Richard Cordray to industry trade groups, the agency will issue new rulemaking tied to the TRID disclosure regime that will provide greater certainty and clarity. Cordray – who has been lambasted by the industry about the integrated disclosure rule for months – noted in the letter: “We recognize that the implementation of the Know Before You Owe rule poses many operational challenges. We also recognize that implementation is particularly challenging because of the diversity of the participants ...


April 29, 2016 - Inside MBS & ABS

Research From Treasury Suggests Dodd-Frank Act Handling of Credit Rating Issues Far from Perfect

The alternatives to credit ratings mandated by the Dodd-Frank Act aimed to address contributors to the financial crisis have their own challenges, according to a new report from the Treasury Department’s Office of Financial Research. John Soroushian, a research analyst for policy studies at the OFR, noted that before the financial crisis, rating services had an incentive to inflate ratings for MBS, ABS and other investments to expand their business. He said rating services were “key enablers” in the creation of MBS and collateralized-debt obligations. “Without ratings, it would have been...


April 29, 2016 - Inside MBS & ABS

Secondary Market Activity Increases in ‘Seasoned’ GSE Whole Loans; TRID ‘Scratch & Dent’ Should Slow Soon

Mortgage trading desks the past few months have seen a noticeable increase in whole loan trading tied to seasoned Fannie Mae and Freddie Mac loans, according to traders interviewed this week by Inside MBS & ABS. Jason Eisendrath, director of loan sale strategies for Mortgage Delivery Specialists, said the sellers include not only money-center banks, but credit unions. “The credit unions, in particular, are holding a lot of [government-sponsored enterprise] paper,” he said. MDS is a part of Mortgage Industry Advisory Corp., New York. It’s...


April 29, 2016 - Inside MBS & ABS

As SFIG Members Continue to Work on TRID Standards, Rating Services Line Up to Rate New Non-Agency MBS

A lack of formal guidance from the Consumer Financial Protection Bureau regarding TRID mortgage disclosures won’t prevent rating services from placing ratings on new non-agency MBS. The rating services are even willing to rate new deals before the Structured Finance Industry Group releases standards for the handling of TRID issues by third-party due diligence firms. However, issuers and investors appear to be less comfortable with liability from the rule the CFPB implemented in October combining the disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act. Save for a $331.95 million jumbo MBS issued by Two Harbors Investment at the end of March, no firm has issued a deal that includes loans subject to TRID. On March 18, SFIG proposed...


April 22, 2016 - Inside MBS & ABS

Velocity to Issue Non-Agency MBS Backed by Residential and Commercial Investment Properties

A lender that focuses on investment properties is preparing to issue a non-agency MBS backed by adjustable-rate mortgages on residential and commercial properties. The deal shares some characteristics with non-agency MBS backed by new loans, but it’s different in a lot of ways. The planned $358.60 million Velocity Commercial Capital 2016-1 received provisional AAA ratings this week from Kroll Bond Rating Agency. Residential properties account for 55.3 percent of the collateral, with small commercial properties making up the rest. All of the mortgages backing the planned MBS are for investment properties. Velocity Commercial Capital issued...


April 21, 2016 - Inside Mortgage Finance

Six Months After Implementation of TRID, Mortgage Closing Times Starting to Improve

Closing times for purchase mortgages are starting to recover from delays tied to the TRID disclosure rule, according to results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The Consumer Financial Protection Bureau’s final rule combining disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act took effect in early October. Average closing times for various mortgage types increased in the following months, though performance has improved recently, according to HousingPulse. For example, the original closing time for purchase mortgages with a downpayment of at least 20 percent where the loan will be delivered to the government-sponsored enterprises was...


April 21, 2016 - Inside Mortgage Finance

The TRID Drama Continues: Buyer Exits Jumbo Space; Industry Loses Hope on ‘Official Guidance’

For mortgage bankers, it was another trying week in TRID purgatory: A mid-sized nonbank exited the correspondent jumbo market because of concerns over legal liability and separately it appeared industry trade groups have given up hope that the Consumer Financial Protection Bureau will issue any type of formal guidance on cures. Meanwhile, the TRID scratch-and-dent market continues to hum along and the consumer watchdog agency has begun examining residential lenders for compliance with the integrated disclosure rule. “TRID exams have commenced...


April 18, 2016 - Inside the CFPB

Industry Attorneys Think PHH Corp. Will Prevail in Dispute With CFPB

Many mortgage industry attorneys seem convinced that PHH Corp. will succeed – at least at the appellate court level – in defying the CFPB in its ongoing legal dispute with the bureau. The crux of the dispute is the bureau’s assertion that PHH violated the Real Estate Settlement Procedures Act and harmed consumers through a mortgage insurance kickback scheme tied to a captive MI. Last week, the U.S. Court of Appeals for the District of Columbia heard oral arguments in the case, PHH Corp. v CFPB, and the day did not go well for the bureau. Former CFPB enforcement attorney Jennifer Lee, now a partner with the Dorsey & Whitney law firm in Washington, DC, succinctly summarized the tough day the bureau ...


April 18, 2016 - Inside the CFPB

GSE Credit-Risk Transfers Face Incremental Losses from TRID

Fannie Mae and Freddie Mac are not conducting loan-level reviews for compliance with the CFPB’s integrated disclosure, and that threatens investors in the pair’s future credit-risk transfer transactions with the possibility of some modest losses because of lender compliance violations, according to a recent report from Moody’s Investor Service. “We expect overall losses on these transactions owing to TRID violations to be fairly small, despite our expectations that the frequency of violations will be high, at least initially,” analysts at the rating service said. “Furthermore, lender representations and warranties and the government-sponsored enterprises’ ability to remove defective loans from the transactions will likely mitigate some of these losses.” Damages for TRID violations are less significant for a securitization transaction compared ...


April 18, 2016 - Inside the CFPB

Kroll May Not Rate Non-Agency MBS Subject to TRID Rule, For Now

Kroll Bond Rating Agency warned recently that it might refuse to rate certain non-agency mortgage- backed securities subject to the TRID mortgage disclosure rule until the CFPB issues formal guidance. The rating service said it’s currently unclear whether certain corrections of errors under the bureau’s integrated disclosure rule will subject non-agency MBS investors to assignee liability. This is an issue that the Structured Finance Industry Group continues to work on, with SFIG also stressing that formal guidance from the CFPB is necessary. “In instances where these violations go un-corrected by an originator, KBRA believes the risks associated with TRID-eligible loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining ...


April 18, 2016 - Inside the CFPB

Real Estate Agents Detail TRID Problems at Point of Origination

Respondents to a recent survey conducted by Campbell Surveys and sponsored by Inside Mortgage Finance, an affiliated newsletter, provided a down-in-the-trenches perspective on broader conceptual and philosophical concerns trade group officials in Washington, DC, often talk about when it comes to the CFPB’s integrated disclosure rule. Survey respondents were asked about the effect TRID was having on their closings. Some representative comments follow: On confidentiality issues, one agent said, “I do not like TRID at all. The closing disclosures cannot be shared. How can we as agents verify all information is correct? Buyers’ agents cannot verify before closing that their commission is correct as well. It’s a complete mess on all ends.” Another agent said, “The biggest problem with TRID ...


April 18, 2016 - Inside the CFPB

TRID-Induced Market Distortions Continue, More Nonbanks May Fail

According to recent interviews, problems persist in the secondary mortgage market because certain jumbo investors won’t buy loans even if there’s just one, minor TRID error. At least one lender – W.J. Bradley Mortgage in Colorado – has closed (in part) because of TRID-related snafus tied to jumbo loan sales. Meanwhile, there’s new speculation that as many as four more lenders, all nonbanks, are contemplating filing for bankruptcy protection because non-agency product is stuck on their warehouse lines. No names have been mentioned so far, and it could be that talk of bankruptcy protection is premature and being looked at as a last resort. On the other hand, the secondary market for TRID “scratch-and-dent” loans is “still going fast and furious,” said ...


April 18, 2016 - Inside the CFPB

Life Under TRID: Industry, Lawmakers Still Press for Guidance on TRID, to No Avail

The mortgage industry and supporters on Capitol Hill are keeping up the heat on the CFPB, urging the powerful consumer regulator to issue official guidance on TRID disclosure errors and assignee liability as problems continue to plague the non-agency secondary market. David Stevens, president and CEO of the Mortgage Bankers Association, said recently: “As one who believes that the bureau has done a lot of good work, it is a phenomenon to me that the simple request for clarity to specific questions we have submitted, amidst the clear and fact-based challenges facing responsible lending in its focus on efforts to be compliant, is being met with such resistance.” According to the MBA chief, this isn’t just lenders bellyaching. “This is ...


April 15, 2016 - Inside MBS & ABS

Politicos Spar Over Dodd-Frank’s Impact on Market Liquidity; Regulators Suggest Market is Still Evolving

Republican and Democrat members of the Senate Banking, Housing and Urban Affairs Committee were at odds during a hearing this week over whether there is much of a liquidity problem in the fixed-income markets today, and if so, to what extent the Dodd-Frank Act or Federal Reserve monetary policy may be responsible. Federal regulators, on the other hand, told the lawmakers that markets are functioning well enough and still evolving in a new, post-crisis environment. They suggested the thing to worry about is how much liquidity there will be in five or 10 years and how it will function. Sen. Dean Heller, R-NV, asked...


April 15, 2016 - Inside MBS & ABS

Moody’s: GSE Risk-Transfer Deals at Risk for Losses Due to TRID Violations

With Fannie Mae and Freddie Mac doing only surface checks for TRID regulatory compliance and not complete reviews, future credit-risk transfer deals from the two government-sponsored enterprises could be at risk from lender compliance violations, according to Moody’s Investors Service. Numerous challenges have arisen in the non-agency secondary market because of concerns about liability for errors in the new mortgage disclosures. But since TRID became effective on Oct. 3, 2015, Fannie and Freddie are only checking to make sure that the correct forms are being used. This lack of diligence for TRID violations may amount...


April 15, 2016 - Inside MBS & ABS

Rating Services Ready to Rate MBS With TRID Loans Even Without Formal Guidance from CFPB

Two rating services published reports in recent days stressing that non-agency MBS with loans subject to TRID mortgage disclosures can be rated, even when the loans have TRID violations. The reports are part of an industry effort to deal with the rule that combines disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act that was promulgated by the Consumer Financial Protection Bureau and took effect in October. Kroll Bond Rating Agency and Morningstar Credit Ratings published separate reports in the past week stating expectations that TRID will have a “limited” impact on non-agency MBS investors. A number of other rating services have made similar statements since TRID took effect, though that has done little to spur issuance. Only one non-agency MBS with TRID loans has been issued...


April 14, 2016 - Inside Mortgage Finance

CFPB’s Cordray Details Available TRID Cures, Still Provides No Clue on More Formal Guidance

Mortgage originators, securitizers and investors are no closer to getting any additional formal guidance from the Consumer Financial Protection Bureau when it comes to industry compliance with the agency’s controversial integrated disclosure rule. The rule, which took effect Oct. 3, 2015, combines the consumer disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act. During a hearing late last week before the Senate Banking, Housing and Urban Affairs Committee, CFPB Director Richard Cordray and Sen. Bob Corker, R-TN, briefly referenced...


April 14, 2016 - Inside Mortgage Finance

New Disclosures by PHH Cast Doubt on Salability of the Nonbank Mortgage Giant

Over the past two years, PHH Corp. has lost $64 million on its mortgage business and now that Merrill Lynch has given notice that it wants to end some of its private-label contracts with PHH Mortgage, the nonbank’s future is beginning to look cloudier. Moreover, analysts and investors who follow the company wonder whether PHH’s private-label model – the bread and butter of its origination business – is fixable in the modern era of mortgage banking. Meanwhile, all of this is happening at a time when management hopes to sell the company, or at least field offers for some of its key assets, including a $226 billion servicing portfolio. The bad news for PHH started...


April 14, 2016 - Inside Mortgage Finance

CFPB Faces Hostile Questions in Dispute with PHH; Appeal to SCOTUS Likely by Whomever Loses the Case

The mortgage industry found some justification to hope for a return to a more traditional interpretation of the Real Estate Settlement Procedures Act, after the Consumer Financial Protection Bureau took some judicial fire during oral arguments early this week in its dispute with PHH Corp. over the company’s captive mortgage reinsurance activity. The crux of the dispute is the bureau’s assertion that PHH violated RESPA and harmed consumers through a mortgage insurance kickback scheme tied to a captive MI company. Virtually all the major mortgage lenders used similar captive reinsurance entities prior to the financial collapse. In the run-up to this week’s oral arguments before the U.S. Court of Appeals for the District of Columbia, the justices seemed...


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