Legislative Issues

Browse articles from all of our Newsletters related to Legislative Issues.

February 24, 2017 - Inside The GSEs

GAO Report Stresses Need for Reform, Leadership Commitment

A prolonged conservatorship coupled with a change in leadership at the Federal Housing Finance Agency could shift priorities for Fannie Mae and Freddie Mac, according to the Government Accountability Office. The GAO said a potential priority change for Fannie Mae or Freddie Mac would only send mixed messages, creating uncertainties for market participants and hindering the development of the broader secondary mortgage market. In its 2017 biennial report released this month, the GAO discussed actions that need to be taken in order to resolve the federal role in housing finance. The need for leadership commitment by Congress and the administration to reform the system was one of the primary themes.

February 24, 2017 - Inside The GSEs

Sen. Crapo Speaks on Potential GSE Reform, Analysts Weigh in

Sen. Mike Crapo, R-ID, newly elected chair of the Senate Banking, Housing and Urban Affairs Committee, said reforming Fannie Mae and Freddie Mac would likely happen in 2018, but he’s concerned about the divisiveness on Capitol Hill. During remarks at the Mid-Size Bank Coalition of America meeting last week, the senator echoed Treasury Secretary Steve Mnuchin’s comments and said that a housing reform bill would be a “high priority” and he doesn’t expect the administration to take unilateral action. Crapo said the atmosphere on Capitol Hill is more toxic than he’s ever seen, with constant pushback over President Trump’s election win. Analysts noted that this is the ultimate risk to housing finance reform, as bipartisan support is needed.

February 24, 2017 - Inside MBS & ABS

Revised GOP Reform Plan Would Significantly Loosen Rules For Rating Services, Roll Back Dodd-Frank Standards

Planned revisions to the Financial CHOICE Act would loosen regulation of rating services, according to a recent memo by Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee. Hensarling sent the memo to the leadership team of the House Financial Services Committee this month detailing changes that will be included in hise so-called CHOICE Act 2.0. The expected revisions to standards for nationally recognized statistical rating organizations go well beyond the rollbacks included in the version of the CHOICE Act that was introduced in September. The 2016 bill would have repealed...

February 23, 2017 - Inside Mortgage Finance

Hensarling Says Delinquency Surge Justifies Suspension of FHA Premium Cut; Consultant Says Spike May be a Fluke

A spike in FHA delinquency rates in the fourth quarter of 2016 has prompted a top House Republican leader to laud the Trump administration for its decision to suspend a 25 basis point cut in FHA mortgage insurance premiums, though some say the increase might be a fluke. Last month, an analysis by Inside FHA/VA Lending, an affiliated newsletter, revealed that delinquency rates were up across the board for FHA loans backing Ginnie Mae mortgage-backed securities. The share of current FHA loans as of the end of the fourth quarter slipped from 94.2 percent to 93.2 percent, while the share of loans 90 days or more past due rose to 0.82 percent, the highest it’s been since June 2014. The figures are based on loan count and are not seasonally adjusted. The Mortgage Bankers Association two weeks ago reported...

February 17, 2017 - Inside FHA/VA Lending

FHA-Related FCA Enforcement, Recoveries Increase in 2016

Claims relating to housing and mortgage fraud represented a huge chunk of the amount recovered by the federal government under the False Claims Act last year. An analysis by the WilmerHale law firm found that the Department of Justice continued to give high priority to FCA investigations and prosecutions in 2016, resulting in more than $4.76 billion in settlements and judgments, nearly $1 billion more than in 2015. The increase also reflected a continued focus on financial institutions and the mortgage lending industry, with approximately $1.6 billion in recoveries last year, the law firm said. The DOJ, working on referrals from the Department of Housing and Urban Development’s inspector general, has used the FCA effectively as a tool in prosecuting FHA-related fraud cases against lenders. The DOJ ...

February 17, 2017 - Inside FHA/VA Lending

Republicans Invoke Cloture in Upcoming Carson Confirmation

Ben Carson is a step closer to being confirmed as secretary of the Department of Housing and Urban Development after Republicans this week invoked cloture to block any attempt by Democrats to delay or prevent a Senate confirmation vote. Republicans filed their cloture motion and waived quorum call on Feb. 13, effectively ending further debate on Carson’s nomination. At least 16 senators must sign a cloture petition.]There has been no date set for Carson’s confirmation vote. The Trump administration has been slow to fill its Cabinet positions, partly due to Democrats’ stalling techniques. So far, only nine cabinet positions have been filled. There has been no Senate action scheduled since the Senate Banking Committee approved Carson confirmation by voice vote on Jan. 24, and nobody seems to have an explanation for the delay. While the committee vote was unanimous, Democrats continue to ...

February 17, 2017 - Inside Nonconforming Markets

Revised CHOICE Act Aims to Limit CFPB

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

February 17, 2017 - Inside MBS & ABS

Fed’s Bullard: Shrinking Balance Sheet Could Begin, Yellen: Fed Won’t Sell MBS, Will Use Runoff Instead

The chatter about the Federal Reserve shrinking its massive $4.5 trillion balance sheet and its huge $1.7 trillion portfolio of agency MBS has continued in recent days, with one Fed official talking up the idea and another describing how the U.S. central bank plans to do it. Federal Reserve Bank of St. Louis President James Bullard said in a speech last week that the Fed could begin normalizing its balance sheet. “The Fed’s balance sheet has been an important monetary policy tool during the period of near-zero policy rates,” Bullard said. Thus far, the Fed’s Open Market Committee has not set...

February 16, 2017 - Inside Mortgage Finance

The Time is Right for a Boom in Servicing Sales. Another Month or Two of Slow Prepayments Could Spur Market

The secondary market for bulk agency mortgage servicing rights is beginning to pick up a decent head of steam, but one factor is holding it back from a full-throttle: worries about prepayment speeds. “We’ve had one month of low prepayment numbers,” said Mark Garland, president of MountainView Servicing Group, Denver. “A couple of more months would be better.” According to investment bankers who work the market, although rates have been on a steady climb since the November election – the yield on the benchmark 10-year Treasury is...

February 16, 2017 - Inside Mortgage Finance

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

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

February 13, 2017 - Inside the CFPB

Other News in Brief

Hensarling Threatens to Use Budget Reconciliation Process to Push Through CHOICE Act 2.0. Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, raised some industry eyebrows last week when details of his new, more aggressive Financial CHOICE Act got leaked to the press, and he indicated he might use the budget reconciliation process to push the bill through Congress.... CFPB Brings Legal Action Against Debt Relief Law Firms, Attorneys. The CFPB recently sued Howard Law PC, Williamson Law Firm LLC, and Williamson & Howard LLP, as well as attorneys Vincent Howard and Lawrence Williamson, in federal court, accusing them of collaborating to charge illegal fees to consumers looking for debt relief....

February 13, 2017 - Inside the CFPB

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

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

February 10, 2017 - Inside The GSEs

MBA Proposal Raises Competition, Government Guarantee Questions

Uneconomic price competition coupled with Congressional discord are some of the concerns analysts have expressed about the Mortgage Bankers Association’s newly released plan for GSE reform. The MBA’s proposal recommends multiple privately owned guarantors, preferably more than two, to increase competition in the market. Fannie Mae and Freddie Mac would be the first two and the MBA suggests that new guarantors receive a charter to enhance competition. “The more market participants that compete, the better for consumers, the economy and the system,” said Rodrigo Lopez, MBA chairman. GSE Reform Principles and Guardrails also suggests that Congress sanction an “explicit government guarantee for eligible securities in order to entice domestic and foreign investors to keep buying...

February 10, 2017 - Inside The GSEs

Reform Still a Treasury Priority, Weighing Administrative Options

Treasury secretary nominee Steve Mnuchin still has GSE reform high on his list, according to one of President Trump’s top economic advisors. Meanwhile, speculation abounds as to whether there’s an administrative solution to GSE reform absent any legislative action. After some back and forth on the topic since the announcement of Mnuchin’s nomination his subsequent comments on the GSEs, economic advisor Gary Cohen said in national media outlets late last week that GSE reform is definitely a priority for Mnuchin. In fact, he said that it’s something Mnuchin’s spent a lot of time working on. “Once he gets approved and confirmed, Steve will be taking that on as one of this early priorities. So we definitely have some plans...

February 10, 2017 - Inside MBS & ABS

MBA Reform Plan Seeks to Preserve TBA Market, But Analyst Says Explicit Guarantee Questionable

The need to preserve liquidity and transparency in the existing to-be-announced market was an important component of the Mortgage Bankers Association’s newly-released plan for housing finance reform, according to Deutsche Bank Securities. Jeana Curro, research analyst with Deutsche, said a handful of provisions in the MBA’s latest proposal stand out as improvements from the industry group’s previous ideas on how to reform Fannie Mae and Freddie Mac. She agreed...

February 10, 2017 - Inside MBS & ABS

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

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

February 9, 2017 - Inside Mortgage Finance

Carson Seeks ‘Strong Housing Finance Practitioner’ For FHA Post, Promises More Clarity for Lenders

Ben Carson, who is expected to be confirmed soon as the next secretary of the Department of Housing and Urban Development, said he’s looking for an experienced mortgage professional to guide the FHA program during his tenure. In recent years, the top FHA job has been held by people with more experience in government than in the mortgage business. The last industry veteran in the post was Dave Stevens, who brought years of mortgage finance experience when he took the job in the first Obama administration. He left in 2011 to become president and CEO of the Mortgage Bankers Association. In response to written questions from Senate Democrats, Carson said...

February 9, 2017 - Inside Mortgage Finance

PHH Prevails in Rejecting Intervenors in CFPB Dispute

Late last week, a three-judge panel of the U.S. District Court of Appeals for the District of Columbia Circuit agreed with arguments made by PHH Corp. and blocked three separate efforts to intervene in the dispute the lender has with the Consumer Financial Protection Bureau. In a simple, single-page order, the three judges "ordered that the motions be denied." The ruling affects...

February 9, 2017 - Inside Mortgage Finance

Trump Exec Order Puts Dodd-Frank in Crosshairs; No Immediate Impact, Sets Table for Future Action

President Trump late last week signed an executive order laying out his “core principles” for regulating the U.S. financial system, and giving the head of the Treasury Department 120 days to detail how the current massive regulatory regime measures up. Trump’s core principles include fostering informed consumer choices, preventing bailouts, promoting economic growth, tailoring regulations and ensuring regulatory accountability. The broadly-worded order specifies, “Nothing in this order shall be construed to impair or otherwise affect ... the authority granted by law to an executive department or agency, or the head thereof.” The order was...

February 3, 2017 - Inside FHA/VA Lending

Suspending Premium Reduction Appears to be Better for HUD

Setting aside the 25-basis-point FHA premium reduction is a good idea because it would not have done much to expand access to credit anyway, according to researchers at the Urban Institute. In a recent analysis, Laurie Goodman, co-director of UI’s Housing Finance Policy Center, and research associate Bing Bai took a closer look at the FHA pricing adjustment and found that the impact on the market would have been small.The researchers concluded that retaining the current pricing for FHA-insured mortgages would help strengthen the FHA’s financial situation and allow the Mutual Mortgage Insurance Fund to build its buffer. As one of his final official acts as secretary of the Department of Housing and Urban Development, Julian Castro announced a 25-basis-point MIP reduction for most FHA single-family mortgages. The fee change was to take effect on Jan. 27, 2017. Just hours after ...

February 3, 2017 - Inside FHA/VA Lending

HUD Issues Guidance on Servicing Loans on Homes with PACE Liens

The Department of Housing and Urban Development has issued guidance for servicing FHA-insured mortgages on properties encumbered with a Property Assessed Clean Energy (PACE) obligation. The PACE guidance establishes servicing policies and procedures that went into effect on Jan. 19, 2017. It applies to all FHA Title II forward mortgages. A PACE loan is a way to finance clean-energy improvements in residential and commercial properties to reduce energy bills and facilitate water and energy conservation. The terms and conditions of a PACE loan may vary among state, local government and programs. Generally, a PACE loan is secured and collected in the same manner as a special tax assessment on the owner’s property. Payments are not made directly to the ...

February 3, 2017 - Inside FHA/VA Lending

MBA Concerned About Lack of Consumer Protections in PACE

The Mortgage Bankers Association has asked the Trump administration to help close a loophole in the Property Assessed Clean Energy (PACE) program that could put consumers at risk. In a recent public service video, Pete Mills, MBA senior vice president for residential policy and member engagement, said the MBA has been in contact with the president’s transition team to see if there is a way to incorporate consumer protections into the program. Mills noted a “significant void in consumer protection” due to the structure of PACE programs. The PACE program allows local or state governments, when authorized by state law, to finance the upfront cost of energy upgrades on commercial, residential or industrial properties. A PACE loan is repaid over a set period – typically 10 to 20 years – through a special assessment on the property on top of the owner’s annual property tax bills. It has seniority over all ...

February 3, 2017 - Inside MBS & ABS

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

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

February 2, 2017 - Inside Mortgage Finance

MBA Housing Finance Reform Plan Recommends Multiple Guarantors to Increase Competition

The Mortgage Bankers Association this week released an updated proposal to establish multiple privately owned guarantors to promote competition in the marketplace. In the MBA’s blueprint, the guarantors would be organized as privately-owned utilities with a regulated rate of return. “The more market participants that compete...

February 2, 2017 - Inside Mortgage Finance

GOP Executes a Work-Around to Push Through Favorable Votes on Nominee for Treasury, AG

A day after Democrats on the Senate Finance Committee delayed a vote on some of President Trump’s nominations by refusing to attend a confirmation hearing, Republicans used a parliamentary maneuver to push through a unanimous favorable vote on two of them. Mortgage industry observers were expecting positive votes this week from the committee on the nominations of Steve Mnuchin as the new head of the U.S. Treasury and Sen. Jeff Sessions, R-AL, as the next U.S. Attorney General. However, Democrat members of the committee refused...

January 30, 2017 - Inside the CFPB

Other News in Brief

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

January 27, 2017 - Inside The GSEs

GSE Lawsuit Plaintiffs Hopeful New Administratin is on Their Side

With the Trump administration now officially in office, GSE shareholders are optimistic about their cases against Fannie Mae and Freddie Mac being resolved. Investors Unite hosted a call last week during which legal experts weighed in on the outlook for GSE shareholder cases. Plaintiffs have been arguing that a government bailout of the GSEs and the subsequent Treasury sweep were unnecessary and illegal. John Yoo, Heller Professor of Law at the University of California Berkley School of Law, said he thinks the election makes a big difference because it gives an incoming president the opportunity to review the constitutional claims of the last president and decide whether to change them.

January 27, 2017 - Inside The GSEs

Mnuchin Sets the Tone for Bipartisan GSE Reform

Treasury Secretary nominee Steven Mnuchin’s recent comments that he’s not a fan of recapitalizing and releasing Fannie Mae and Freddie Mac and wants to find a “bipartisan solution” to GSE reform has caused speculation about what reform will look like under the Trump administration.The comments, made during his Senate confirmation hearing last week, presented a softer take on housing reform than his earlier comments suggested. Shortly after being ...

January 19, 2017 - Inside Mortgage Finance

Trump’s Plans for Corporate Tax Reduction Could Prompt Treasury Draw by GSEs and Spur GSE Reform Activity

Legislative reform of the government-sponsored enterprises doesn’t appear to be a high priority for Republican lawmakers, but President-elect Donald Trump’s plans to reduce the corporate tax rate could inadvertently prompt some GSE reform activity, according to industry analysts. As of the end of the third quarter of 2016, Fannie Mae and Freddie Mac had a combined $53.80 billion in deferred tax assets. The DTAs result from differences between the carrying amounts of existing assets and liabilities under generally accepted accounting principles and their respective tax bases. The DTAs are...

January 19, 2017 - Inside Mortgage Finance

Trump Administration Expected to Freeze Cut in FHA Mortgage Insurance Premiums

The Trump administration is expected to put a temporary freeze on the 25 basis point cut in FHA annual premiums that is scheduled to take effect Jan. 27. One industry source noted: “On Jan. 20, President Trump will be issuing an executive order that freezes all past actions over a certain period of time. The FHA premium reduction gets swept into this.” Sources told...

January 16, 2017 - Inside the CFPB

ABA Calls for CFPB Reform, Expanded Qualified Mortgage

The American Bankers Association sent a letter to the leaders of Congress recently, urging adoption of a bipartisan regulatory relief package that would provide unspecified reform of the CFPB and address an expanded definition of a qualified mortgage. When it comes to the bureau, the ABA urged sensible regulation by restoring “balance to the regulatory process, including Consumer Financial Protection Bureau reform,” and by focusing on promoting both economic growth and safety and soundness. On the QM point, the organization asked lawmakers to “reform mortgage regulations that have raised costs and prevented banks from flexibly serving their customers without enhancing consumer protections or safety and soundness. Most crucially, deeming loans held in portfolio as qualified mortgages will expand safe and ...

January 13, 2017 - Inside MBS & ABS

Multiple ABS Sectors Expected to Turn in Stable Performances This Year, Analysts Say

With financial markets awaiting, with some uncertainty, the public policy positions of the incoming Trump administration and the new Congress, industry analysts say ABS investors can expect most sectors to turn in stable performances in 2017. “As we look back on 2016 and consider the 2017 global structured finance outlook, most markets and their credit conditions seem favorable, and in some cases, even ideal. However, 2017 has many unknowns, especially the specific policies and priorities that will be adopted by the new U.S. administration,” said analysts with S&P Global Ratings in a recent outlook report. “Some would suggest government-sponsored enterprise privatization is possible, risk retention could be revised, and an appropriate/globally consistent capital treatment for structured finance products could be approved.” Further, “For the most part, we expect...

January 13, 2017 - Inside MBS & ABS

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

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

January 13, 2017 - Inside MBS & ABS

The Outlook for GSE Reform Brightens, But When and How is a Different Story

Change in the political balance in Washington that put the GOP in control of both houses of Congress and the executive branch has fueled speculation that something will finally be done to resolve the conservatorships of Fannie Mae and Freddie Mac. As in the past, there is no shortage of competing proposals. At an Urban Institute seminar this week, Rick Lazio, former Republican congressman from New York, said...


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

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

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

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