Legislation

Browse articles from all of our Newsletters related to Legislation.

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...


April 8, 2016 - Inside MBS & ABS

MBS Investors Ask for Action from CFPB as TRID Is Seen as ‘Chilling’ Investment in the Mortgage Market

The Association of Mortgage Investors last week urged the Consumer Financial Protection Bureau to address ongoing issues raised by the so-called TRID mortgage disclosure rule. “The recent evidence is that the rule, while extremely well-intentioned, has resulted in a climate of legal uncertainty and is chilling private investment in the U.S. mortgage market,” Chris Katopis, executive director of the AMI, wrote to CFPB Director Richard Cordray. The rule took effect...


April 8, 2016 - Inside MBS & ABS

Are Fannie Mae and Freddie Mac Buying Mortgages That Really Aren’t TRID Compliant? Does it Matter?

As the non-conforming secondary market continues to grapple with headaches surrounding TRID errors and scotched jumbo deals, another storm may be brewing: whether Fannie Mae and Freddie Mac are buying loans that – if tested properly for violations – would reveal flaws. The good news for the lending industry is that the government-sponsored enterprises are not now conducting routine post-purchase file reviews for technical compliance for TRID errors. The GSEs now are just checking to make sure the new consumer disclosures, which merge the requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act, are being used. Still, that has not prevented...


April 7, 2016 - Inside Mortgage Finance

Industry Allies Fault CFPB on TRID, ATR, Use of Enforcement Actions to Set Policy

Mortgage lending allies, free-market advocates and Congressional critics of the Consumer Financial Protection Bureau this week took issue with some of the CFPB’s most significant mortgage rules and its use of regulatory enforcement actions to establish policy they said would be more appropriately set in the traditional public notice and comment process. Former Federal Trade Commission official Todd Zywicki, now a law professor at George Mason University, told members of the Senate Banking, Housing and Urban Affairs Committee that many smaller banks have chosen to exit the mortgage market rather than bear the regulatory cost and risk associated with complying with the numerous mortgage regulations promulgated by the CFPB. Citing a survey of small banks conducted by GMU’s Mercatus Center, Zywicki said...


April 7, 2016 - Inside Mortgage Finance

TRID Continues to Plague Non-Agency Secondary Market; More Nonbanks Could Hit the Skids

The mortgage industry is keeping the heat on the Consumer Financial Protection Bureau, 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. According to interviews conducted by Inside Mortgage Finance over the past several weeks, problems persist in the secondary because certain jumbo investors won’t buy loans even if there’s just one, minor TRID error...


April 4, 2016 - Inside the CFPB

Other News in Brief/Later This Month

U.S. Military Personnel Continue to Report Problems With Their Mortgages. Complaints to the CFPB from American military personnel about their mortgages rose 10 percent from 2014 to 2015, according to a recent report from the bureau. The good news for mortgage lenders is that total complaints about their operations – roughly 9,900 – were less than half of the total generated by debt collection practices, which came to about 20,500. ... FHFA Wants Public Input on National Mortgage Borrower Survey. The Federal Housing Finance Agency is seeking public comments about the American Survey of Mortgage Borrowers, an information collection effort otherwise known as the National Survey of Existing Mortgage Borrowers. ...


April 4, 2016 - Inside the CFPB

GAO Suggests Congress Give CFPB More Power

Congress should consider whether additional changes to the federal financial regulatory structure are needed to reduce or better manage fragmentation and overlap in the oversight of financial institutions and activities to improve the consistency of consumer protections, according to a new report from the Government Accountability Office. “For example, Congress could consider ... transferring the remaining prudential regulators’ consumer protection authorities over large depository institutions to the CFPB ... among other considerations,” the report stated. One of the concerns GAO raised is that a federal financial regulatory system with multiple regulators can result in inefficient and inconsistent safety and soundness and consumer protection oversight, with negative consequences for industry players. “While Congress addressed some of our concerns through consolidating rulemaking ...


April 4, 2016 - Inside the CFPB

MBA Urges CFPB to Move Slowly On HMDA Resubmission Guidelines

Mortgage banking industry representatives told the CFPB it should not be in a rush to make any changes to its resubmission guidelines for data that will be submitted under the bureau’s new Home Mortgage Disclosure Act rule. Because of continuing problems in implementing the integrated disclosure rule, “companies have not yet had available sufficient resources to begin HMDA implementation in earnest,” the Mortgage Bankers Association told the bureau in a recent comment letter. “Also, considering the unprecedented expansion of data elements required under the new HMDA rule, it can be anticipated that when implementation begins, there will be a far better understanding of myriad issues including appropriate resubmission guidelines.” Consequently, MBA said that while some changes may now be warranted, ...


April 4, 2016 - Inside the CFPB

Want TRID Compliance? First Meet These 150 Requirements

A single mortgage would have to meet nearly 150 requirements to achieve compliance with the TRID integrated disclosure rule, according to a framework proposed last week by members of the Structured Finance Industry Group. Third-party due diligence firms will test loans for most of the rule’s requirements, according to a draft of the TRID compliance “review scope” obtained by Inside Nonconforming Markets, an affiliated publication. Since the integrated disclosure rule took effect in October, due diligence firms have found widespread violations on non-agency mortgages, limiting sales of loans with violations due to liability concerns. The SFIG proposal suggests that many of the TRID compliance violations could be cured after being uncovered by a due diligence firm, but violations of about ...


April 4, 2016 - Inside the CFPB

Investors Warn the CFPB About Chilling Effect of the TRID Rule

The Association of Mortgage Investors wrote to the CFPB last week for guidance on the integrated disclosure rule known as TRID, warning that the marketplace woes stemming from the new rule may extend to the conforming mortgage loan market. “The recent evidence is that the rule, while extremely well-intentioned, has resulted in a climate of legal uncertainty and is chilling private investment in the U.S. mortgage market,” said Chris Katopis, executive director of the AMI. Further, “We urge the bureau to open a new public comment period to address the concerns of mortgage investors,” he added. “We seek formal written guidance clarifying the liability for a violation of each individual TRID requirement, as well as the scope and applicability of ...


April 4, 2016 - Inside the CFPB

Life Under TRID: $20M of W.J. Bradley’s Jumbos on Sale in ‘Scratch-and-Dent’ Market

In a follow-up development to earlier reports of the demise of W.J. Bradley Mortgage as a result of the CFPB’s integrated disclosure rule, affiliated newsletter IMFnews reported last week that at least $20 million worth of jumbo loans originally funded by the lender have hit the TRID “scratch-and-dent” market, citing an investor who plays in the space. The loans were offered by Texas Capital Bank, which several sources have identified as a key warehouse lender to WJB, a now defunct privately held non-depository. Early reports on the company’s voluntary closure suggest that TRID errors on non-agency mortgages played a key role in the firm’s demise. Sources contend that a few months back WJB tried to sell at least $30 million ...


March 25, 2016 - Inside MBS & ABS

Risk-Retention Suit Moved to D.C. District Court, HFSC Eases CLO Managers’ Risk-Retention Burden

A federal appeals court in Washington, DC, ordered the transfer of a case challenging risk-retention rules to the district court because the petitioner sought review of an agency action “in the wrong court.” Writing for the majority, Judge Janice Brown of the U.S. Court of Appeals for the District of Columbia shifted the Loan Syndications and Trading Association’s (LSTA) challenge to the lower court for lack of statutory authorization to review the rule. “As it turns out, LSTA’s challenge on the merits will have to wait,” she wrote. Jointly prescribed by the Securities and Exchange Commission, Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, the credit risk-retention regulations required...


March 25, 2016 - Inside MBS & ABS

Due Diligence Firms Working to Standardize Reviews for TRID Compliance, Helping Non-Agency MBS Issuance

Due diligence firms led an effort to issue a draft proposal late last week that would establish a standardized approach for reviewing compliance with the TRID mortgage-disclosure rule. The effort organized by the Structured Finance Industry Group was met with praise by industry participants. “The draft proposal represents a significant step forward for developing an industry standard treatment of errors related to the new residential mortgage disclosure requirements,” Fitch Ratings said. TRID is industry shorthand for a new integrated disclosure rule that covers requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act. Third-party due diligence providers have identified...


March 24, 2016 - Inside Mortgage Finance

TRID’s Impact on Fannie and Freddie is Little or None; Customer Responsible for Any Violations

The impact of the TRID integrated-disclosure rule that took effect on Oct. 3 seems to have had little impact on Fannie Mae and Freddie Mac. For now, the government-sponsored enterprises are focused on whether sellers are using the correct forms, not whether there are mistakes. The GSEs have amended their contractual obligations with their customers to let them know that the customer is responsible for any potential or actual loss as a result of TRID violations. “So they’re basically turning what was a repurchase obligation into an indemnification obligation,” said...


March 24, 2016 - Inside Mortgage Finance

Was W.J. Bradley’s Closure All Related to TRID Errors or Something Else? Are More WJBs Ahead?

Errors in TRID disclosures on jumbo mortgages played a key role in the recent closure of W.J. Bradley Mortgage, but the privately held nonbank may have had other problems as well, according to industry officials who claim to have intimate knowledge of the company’s operations. A thin capital base is one of those problems. An investor in the company and an investment banking official each told...


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