Regulations

Browse articles from all of our Newsletters related to Regulations.

August 29, 2014 - Inside FHA Lending

Around the Industry

Revised HUD/VA Addendum to the Uniform Residential Loan Application. On July 30, the FHA has posted on its HUDCLIPS website a revised Addendum to the Uniform Residential Loan Application (Form HUD-92900-A/VA Form 26-1802). This form is used for both FHA and VA mortgage originations.The Department of Veterans Affairs has updated its form to clarify what constitutes a valid marriage for the purpose of obtaining VA benefits. Although the changes to the form do not apply to FHA-insured mortgages specifically, lenders should begin using the revised form for new FHA mortgage originations as soon as possible, the FHA recommended. Processing Request for Execution of VA Quitclaim Deeds. The Department of Veterans Affairs has issued guidance (Circular 26-14-19) for handling of requests for execution of quitclaim deeds. A quitclaim deed is a legal document that is used to transfer a person’s rights to real estate to ...


August 29, 2014 - Inside FHA Lending

Views Sought on Draft Appraiser Requirements

The Department of Housing and Urban Development is requesting feedback from stakeholders regarding proposed policy drafts covering appraiser eligibility and oversight, and conducting appraisals, among other things. The documents will be part of the FHA’s Single-Family Housing Policy Handbook, a consolidated and authoritative agency handbook that will make it easier for stakeholders to do business with the FHA. The drafts also cover appraiser requirements for performing an FHA appraisal, including property eligibility requirements for Title II forward and reverse mortgages, as well as forms and data delivery requirements. Comments must be submitted by Sept. 2, 2014. The Single-Family Policy handbook is a multi-phased initiative to develop a single, comprehensive source for FHA single-family housing policy using clear and direct language and an improved organization structure. In fall 2013, the FHA posted its first draft section, Application Though Endorsement for Title II Forward Mortgages. The FHA is finalizing ...


August 29, 2014 - Inside FHA Lending

State Legislatures Pass Reverse Mortgage Bills

Two states have passed legislation placing varying spins on the Department of Housing and Urban Development’s counseling requirements for lenders and borrowers of FHA-insured reverse mortgages. In California, the state Senate unanimously approved AB 1700, which would mandate a seven-day “cooling off” period between the time a borrower receives counseling and when an application is taken. AB 1700 passed the CA Assembly by a vote of 73 to 1. In addition, the bill would require a lender to provide a worksheet guide that addresses certain issues the borrower should consider and discuss with the counselor, such as income and ability to repay as well as taxes and insurance. The counselor and the borrower are both required under the bill to sign the worksheet guide before any reverse mortgage application is taken. No schedule has been set for ...


August 29, 2014 - Inside FHA Lending

FASB Updates TDR Guidance for FHA, VA Loans

The Financial Accounting Standards Board has updated its guidance on troubled debt restructurings (TDRs) to provide lenders some uniformity in accounting for government-backed mortgages upon foreclosure. The changes to FASB’s rule, “Receivables – Troubled Debt Restructurings by Creditors,” affect FHA and VA lenders and would take effect for public entities with reporting periods after Dec. 15, 2014. All other entities will have to comply after Dec. 15, 2015. “In addition to accounting consistency, the updated rule provides greater certainty as to the amount that can be expected to recover through the government guarantees,” the board said. The changes became necessary because the accounting varied among lenders, resulting in diverse practices, according to the Emerging Issues Task Force, which promulgates implementation guidance within the ...


August 29, 2014 - Inside FHA Lending

U.S. Court Upholds HUD Suspension of Lender

A decision by the Department of Housing and Urban Development to suspend a Texas mortgage firm and its top executive was not “arbitrary and capricious” and did not violate due process, according to a recent Houston district court ruling. The court granted HUD’s motion for summary judgment and dismissed all of the plaintiffs’ claims with prejudice. In Allied Home Mortgage Corp. v. Donovan, (No. H-11-3864, 2014 WL 3843561, S.D. Tex. Aug. 5, 2014), a U.S. Attorney’s Office sued Allied Home Mortgage Corp. and its chief executive officer, James Hodge, in Manhattan federal district court for allegedly lying about its compliance with FHA requirements. Specifically, the former Houston-based mortgage net branch operator (currently doing business as Allquest Home Mortgage Corp.) allegedly violated the False Claims Act and the Financial Institutions Reform, recovery and Enforcement Act by ...


August 29, 2014 - Inside FHA Lending

Over $65B in FHA Loans Securitized in 1H14

An estimated $65.5 billion of FHA-insured mortgages, excluding reverse and modified loans, were included in Ginnie Mae mortgage-backed securities issued during the first six months of 2014, according to an Inside FHA Lending analysis of agency securitization data. Ginnie Mae FHA MBS issued during the first half of the year nearly matches the total number of new FHA loans originated over the same period (see related chart, p. 4-5). FHA purchase home mortgages served as collateral on 76.3 percent of Ginnie Mae MBS issued over the six-month period, while loans to first-time homebuyers accounted for 63.0 percent of Ginnie MBS issued during the period. The FHA loans in Ginnie pools over the last two quarters showed an average FICO score of 681, a loan-to-value ratio of 92.5 percent and an average loan amount of $169,093. Except for fifth-ranked Freedom Mortgage, the rest of the top five ... [1 chart]


August 29, 2014 - Inside FHA Lending

FHA Lending to Low FICO Borrowers Increases

FHA lenders have been lending more aggressively to borrowers with FICO scores below 679 than to more affluent borrowers, according to recent research by an independent housing and consulting firm. Using data from the Department of Housing and Urban Development and interviews with mortgage industry executives, researchers at John Burns Real Estate Consulting found that homebuyers with less-than-stellar credit are finding it easier to buy a home below the FHA loan limit. In contrast, the study also found that automated underwriting prevents many highly qualified borrowers from obtaining a home loan because their “income situation does not fit squarely in the credit box.” This segment includes affluent retirees, self-employed, or commissioned salespeople. “In the aftermath of the housing crisis, the reality is that we are lending aggressively to the poor and conservatively to the rich,” said Lisa Marquis Jackson, senior vice president at John Burns. The study’s findings challenge ...


August 29, 2014 - IMFnews

What We’re Hearing: The Never Ending Ocwen Story / Moody’s Downgrades Ocwen / No HQ Sale for Freddie Mac / Will the CFPB Buy the Fannie Property? / Now, Why Does Fannie Mae Need an Attorney with NYSE Knowledge?

Where will Fannie Mae ultimately windup? The early betting is the Washington waterfront near Nationals Park…


August 29, 2014 - Inside FHA Lending

FHA Volume Drops in First Half of 2014

FHA loan volume continued to decline in the first half of 2014 despite continuing improvement in the quality of new originations and a high demand for purchase mortgage loans, according to Inside FHA Lending’s analysis of agency data. Overall, FHA production for the first six months of the year, excluding reverse mortgages, totaled $61.1 billion. While originations were up 16.0 percent in the second quarter, it was down a hefty 51.8 percent on a year-over-year basis. Purchase loans accounted for $47.3 billion of new FHA-insured loans made over the six-month period while an estimated $58.4 billion of loans had fixed interest rates. For FY 2014, volume was down 19.0 percent. “In FY 2013, approximately 702,000 FHA-insured loans were originated and this year we’re running at 560,000 loans, which is roughly 20 percent of last fiscal year’s total,” said an FHA analyst. “In the first quarter, approximately ... [1 chart]


August 29, 2014 - Inside FHA Lending

FHA Bars Post-Payment Charge on Prepaid Loans

The FHA has issued two final rules enhancing consumer protections – one prohibiting lenders from charging additional interest on FHA-insured mortgages that are paid in full and another ensuring that borrowers of adjustable-rate mortgages receive earlier notice of rate changes. Both rules were published in the Aug. 26 Federal Register. The first rule eliminates the practice of charging the borrower a full-month’s interest even if the mortgage is prepaid in full before the end of the month. It adopted the proposed rule, which was issued for comment on March 13, 2014, without change. Effective Jan. 21, 2015, charging borrowers post-settlement interest, which is broadly defined by the Consumer Financial Protection Bureau as a “prepayment penalty,” will be prohibited for all FHA single-family mortgage products and programs. In the rule’s preamble, HUD said it expects lenders to ...


August 29, 2014 - Inside FHA Lending

GNMA Unable to Use $200 Million Windfall

Roughly $1 billion in damages will flow through to the FHA and Ginnie Mae from Bank of America’s record $16.65 billion global mortgage-backed securities settlement with the Department of Justice. Although most of the DOJ’s case centered around faulty private-label MBS that BofA and its forbears (namely Countrywide and Merrill Lynch) underwrote during the housing boom, a small piece of the settlement is tied to servicing chores that the bank did for Ginnie Mae. And apparently, BofA didn’t do a very good job of servicing the underlying product. The bank took over as the subservicer on roughly $26.2 billion in mortgage servicing rights that once belonged to Taylor, Bean & Whitaker, a large nonbank based in Ocala, FL. When TBW went bust in the second half of 2009, BofA was given the subservicing contract. “BofA serviced the loans for us,” said Ginnie Mae president Ted Tozer. “And they did a ...


August 29, 2014 - IMFnews

New York Attorney General, CFPB Target More Mortgage Relief Firms

The New York AG has secured a temporary restraining order barring the loan mod companies from collecting advance fees. The state's top cop also froze their bank accounts.


August 29, 2014 - IMFnews

FHFA IG: Freddie Mac Could Save Millions by Reviewing More Servicer Claims

In 2013, Freddie Mac reimbursed its servicers $1.4 billion but identified and denied $126 million in what the IG calls “erroneous” claims.


August 29, 2014 - IMFnews

Non-Agency Players Want Fannie/Freddie Loan Limits Lowered, But…

The American Bankers Association believes GSE loan limits in much of the nation could be reduced.


August 28, 2014 - IMFnews

Colorado Lender Sees Mortgage Volume Devastated When All of Its Loan Officers Quit

It's highly unusual that an entire staff of loan officers would leave on their own accord all at once, especially in a tough origination market.


August 28, 2014 - IMFnews

Short Takes: Maybe Freddie Mac Will Sell its HQ Too? / A GSE in Montana? / Ocwen Executive Selling Shares / About Those Private MBS Placements… / Benmosche Stepping Down from AIG

But if Fannie and Freddie sell their headquarter properties, shouldn’t they move to a low cost state like Wyoming or Montana? I


August 28, 2014 - IMFnews

New HMDA Disclosures Will be a Fair Lending ‘Game Changer’ for Originators

The comment period on the CFPB’s proposed rule closes Oct. 22, and lenders won’t be subject to the proposed new reporting requirements until 2016.


August 28, 2014 - IMFnews

SEC Revamps Requirements for Rating Services, Due Diligence Firms

Due diligence providers that work on MBS and ABS also will have to provide certifications to the rating services which will be disclosed on each rating issued.


August 27, 2014 - IMFnews

Flagstar in Talks with CFPB Over Alleged Loss Mitigation Violations, Default Servicing

Flagstar, which owns roughly $69 billion in mortgage servicing rights, said it has already provided the CFPB with documents and “other information.”


August 27, 2014 - IMFnews

SEC Rule Mandates 3-Day Waiting Period for Non-Agency MBS Issuance

However, non-agency MBS issuers won a slight concession on the matter: the SEC had initially proposed a five-day waiting period.


August 27, 2014 - IMFnews

Moody’s, Urban Institute Want Changes to FHFA’s MI Eligibility Rules

In early July, the FHFA unveiled the new MI eligibility standards, which propose – for the first time – risk-based capital rules that are tied to a measurement called “available assets.”


August 27, 2014 - IMFnews

CFPB Answers Industry Questions on RESPA/TILA Disclosures

Some lenders asked the CFPB if creditors are required to provide revised loan estimates on the same business day that a consumer or LO requests a rate lock.


August 26, 2014 - IMFnews

Short Takes: Will the FHFA Extend the Comment Period for MI Firms? / Some Consumers Believe HARP is a Scam / Freddie (and Fannie) Got Taken by a Wolf / Bill Erbey (Indirectly) Owns a Much Larger Stake in Altisource

Indirectly, Bill Erbey controls about 5.9 million shares of Altisource through a limited liability company called Salt Pond Holdings.


August 26, 2014 - IMFnews

FHFA IG Places Blame for TBW Scandal on Regulators, Counterparties, Investors

The FHFA IG claims a Fannie Mae executive back in 2000 discovered that TBW had pledged the same collateral – mortgages – to both Fannie and another company. But then Fannie took no action until two years later.


August 26, 2014 - IMFnews

Citibank to Refund Millions in Force-Placed Insurance Class Action

The Casey lawsuit also alleged that Citibank increased the amount of force-placed flood insurance required for some borrowers in excess of their unpaid principal balance.


August 26, 2014 - IMFnews

Earthquakes, Hurricanes Not Much of a Risk for Investors in Non-Agency MBS

Barclays said few loans in vintage non-agency MBS were exposed to the recent earthquake.


August 25, 2014 - IMFnews

In Settling with the FHFA, Goldman Will Buyback PLS for $3.15 Billion

According to the Inside Mortgage Finance MBS Database, the original unpaid principal balance of the PLS deals in question was almost $40 billion.


August 25, 2014 - IMFnews

SEC Set to Vote on Non-Agency MBS Rules Requiring Increased Disclosure and Credit Ratings

The Securities and Exchange Commission proposed controversial changes that would place greater burdens on MBS issuers and potentially increase privacy concerns for borrowers.


August 25, 2014 - IMFnews

Most of the Mortgage Industry Does Not Want a G-Fee Hike

SIFMA said the FHFA should view g-fees not as “static amounts,” but rather as compensation for credit enhancements that may vary from time to time.


August 22, 2014 - Inside The GSEs

Enterprise Endnotes

Fannie, Freddie Subprime Holdings Continue to Run Off. The GSEs’ holdings of nonprime mortgages continue to decline, largely due to runoff, according to a new analysis by Inside Nonconforming Markets, an affiliated publication. Fannie Mae and Freddie Mac held a combined $252.2 billion of Alt A and subprime mortgage assets at the end of the second quarter, down 18.3 percent from 2Q13. Purchased/guaranteed mortgages account for 71.9 percent of the holdings, with the rest of the GSEs’ nonprime exposure in non-agency mortgage-backed securities.


August 22, 2014 - Inside The GSEs

IG Dings FHFA for Lax Oversight of Fannie Short Sales Closed at Loss

Delegated servicers hired by Fannie Mae failed on numerous occasions to close short sales at the authorized price, according to a new audit from the Inspector General of the Federal Housing Finance Agency. The IG also found that a Fannie Mae remediation plan does not hold servicers fully accountable for the resulting losses. Issued late last week, the IG audit focused on the effectiveness of the FHFA’s oversight and Fannie’s controls over delegated servicers to ensure that net proceeds for short sales met the authorized reserve established by Fannie. The IG found that both the GSE and its regulator came up short.


August 22, 2014 - Inside The GSEs

FHFA’s Proposed G-fee Increase Enjoys Little Industry Support

As the Federal Housing Finance Agency mulls over a proposed increase in fees charged by the GSEs to provide guarantees on mortgage-backed securities, so far those advocating for a g-fee hike remain in the minority. The Securities Industry and Financial Markets isn’t flatly opposed to an increase in g-fees under certain conditions but policy makers should “consider the broader context” in which the guaranty fee will be raised.


August 22, 2014 - Inside The GSEs

GSE Shareholder Group Calls on FHFA to End Conservatorship

The head of a group of disenfranchised Fannie Mae and Freddie Mac investors has called on Federal Housing Finance Agency Director Mel Watt to end conservatorship of the two GSEs and undo what stakeholders consider the illegal government “net worth sweep” of Fannie and Freddie profits. Tim Pagliara, executive director of Investors Unite, followed Watt to Atlanta to seek a meeting with and to put pressure on the director to acknowledge the concerns of GSE shareholders.


August 22, 2014 - IMFnews

What We’re Hearing: Banks to FDIC: Drop Dead / FHA and Ginnie Get a Chunk of the Massive BofA Settlement / Should DOJ Sue a Dead Subprime Executive? / LO Profession in Bifurcation Mode / The Pain Caused by Ocwen / DocMagic Gets CFPB Contract

A fair question to ask is this: If DOJ goes after Mozilo, why not go after the owners of Ameriquest/Argent which created so much of the faulty subprime product that Greenwich securitized?


August 22, 2014 - IMFnews

Realtors Prefer ‘Local’ Mortgage Lenders Over Call Centers

Another concern was that out-of-state call center lenders might not know the local lending laws, which can result in delayed closings.


August 22, 2014 - IMFnews

Reverse Mortgages Reportable Under HMDA If CFPB Gets Its Way

Currently, residential lenders only have to report information on a closed-end reverse mortgage if the transaction involves a home purchase, home improvement or refinancing.


August 22, 2014 - IMFnews

CFPB Mortgage Rules Having More Impact on Jumbo, Nontraditional

Among the banks reporting that the rules had no effect on their approval rates, half indicated that lending policies would have been tighter without the safe harbor for mortgages that pass the GSEs’ automated underwriting models.


August 21, 2014 - IMFnews

Short Takes: Manny Friedman Bullish on PennyMac / The Ocwen Mystery: Why All the Spinoffs? / Reverse Loan Officers Clean Up / CTM Has a New Parent / LenderLive Names New Servicing Executive

The average loan officer makes a $4,000 commission on each reach reverse mortgage they originate. Really?


August 21, 2014 - IMFnews

BofA Inks Record $16.65 Billion Global MBS Negligence Settlement

In its statement announcing the settlement, BofA stressed, “The claims relate primarily to conduct that occurred at Countrywide and Merrill Lynch prior to Bank of America's acquisition of those entities.”


August 21, 2014 - IMFnews

Final Tally: Banks Posted Solid Gains in Mortgage Income During 2Q

The second-quarter rebound in mortgage profits was linked to an increase in new lending and loan sales.


August 20, 2014 - IMFnews

Short Takes: Former Subprime CEO Continues On / Privlo Definitely Did Not Raise $350 Million / Comerica Seeks Warehouse Manager for LA / More Regulations Coming from the CFPB? / A Sea Change in Fannie Underwriting Guidelines?

A big deal or ho-hum: Fannie Mae in late July said it will allow for shorter waiting periods involving mortgage debt charge-off accounts and mortgage debt that is discharged through a bankruptcy.


August 20, 2014 - IMFnews

More Regulatory Scrutiny Tied to Mortgage Servicing Transfers (Sales)

An agency spokesman told IMFnews that as a “general matter” the CFPB considers transfers significant if they involve at least 5,000 loans.


August 20, 2014 - IMFnews

GSE Shareholder Group Gets Face Time with FHFA’s Watt, But…

Investors Unite now boasts almost 1,000 members, which include both common and preferred stakeholders in Fannie Mae and Freddie Mac.


August 20, 2014 - IMFnews

Compliance Vendor Warns CFPB’s HMDA Proposal Could be the Death Knell for Mortgage Lending

“I’m wondering how many people buy homes outside of buying them with cash,” Ryan said during the webinar. “To me it’s that serious.”


August 19, 2014 - IMFnews

SEC Subpoenas Ocwen Regarding Business with Related Companies

Ocwen received a subpoena from the Securities and Exchange Commission and another subpoena from the SEC appears to be on the way.


August 18, 2014 - Inside the CFPB

Worth Noting/Comments Due This Week/Vendor Update

CFPB Making Its Presence Felt Among Fannie Mae and Freddie Mac Servicers. Fannie Mae’s latest earning filing indicates the CFPB and/or the New York State Department of Financial Services have been reviewing the activities of Fannie Mae’s three largest non-depository servicers (which would be Nationstar, Ocwen and possibly Quicken Loans, according to the latest ranking by Inside Mortgage Finance, an affiliated publication). The scrutiny of Quicken Loans seems to be a new development. The bureau would not comment. Meanwhile, during the first half of 2014, Freddie Mac said in its second quarter earnings announcement that it implemented requirements for its seller/ servicers in response to some final rules from the CFPB, including rules concerning the requirements for borrowers’ ability to ...


August 18, 2014 - Inside the CFPB

OIG Reviewing CFPB Coordination With Joint Supervisory Activities

The Office of Inspector General for the CFPB, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Treasury Department are evaluating the coordination between the CFPB and other regulatory agencies in conducting supervisory activities, according to the CFPB OIG’s latest work plan. In June 2012, the CFPB and the prudential regulatory agencies issued a memorandum of understanding to clarify how the agencies will coordinate their supervisory activities. “The objective of the evaluation is to confirm that the required coordination is occurring and has been effective in avoiding conflicts or duplication of efforts,” the bureau’s OIG said. The evaluation is currently expected to be completed sometime during the third quarter of 2014. There are a handful of other ...


August 18, 2014 - Inside the CFPB

CFPB Warns Consumers About Virtual Currencies Like Bitcoin

Last week, the CFPB warned consumers about the potential risks associated with “virtual” currencies such as Bitcoin, and indicated it is now accepting consumer complaints about such products and services. Potential issues with virtual currencies identified by the bureau include unclear costs, volatile exchange rates, the threat of hacking and scams, and the possibility that companies may not offer help or refunds for lost or stolen funds. “Virtual currencies may have potential benefits, but consumers need to be cautious and they need to be asking the right questions,” said CFPB Director Richard Cordray. “Virtual currencies are not backed by any government or central bank, and at this point consumers are stepping into the Wild West when they engage in the ...


August 18, 2014 - Inside the CFPB

Rulemaking More Likely After Critical Report on Overdraft Fees

Industry insiders think it’s more likely the CFPB will promulgate a final rule on bank overdraft protection after the bureau released a report that found small debit card purchases often lead to expensive overdraft charges. The study found that the majority of debit card overdraft fees are incurred on transactions of $24 or less and that the majority of such overdrafts are repaid within three days. Put in lending terms, if a consumer borrowed $24 for three days and paid the median overdraft fee of $34, such a loan would carry a 17,000 percent annual percentage rate, according to the CFPB. The report “shows that consumers who opt in to overdraft coverage put themselves at serious risk when they use ...


August 18, 2014 - Inside the CFPB

CFPB is Pressing Banks to Disclose Campus Marketing Agreements

CFPB Student Loan Ombudsman Rohit Chopra is raising the headline risk for banks that fail to be transparent about the campus financial product marketing agreements they have with colleges and universities. In a recent blog post alerting colleges and students about “secret banking contracts,” Chopra indicated the bureau has been mailing out letters to such educational institutions “to make sure they know that their bank partner has not yet committed to transparency when it comes to student financial products” because the financial institution has not yet posted its marketing agreement with the school on its website. Last year, the CFPB launched an inquiry into financial products marketed to college and university students to determine whether the market is working for...


Poll

Home-equity lending is beginning to show new life. My company (pick one):

Plans to enter this market over the next 12 months.

25%

Is already making home equity loans and hopes to increase the offerings.

45%

Is in the market but don’t expect much growth.

15%

Is not making second liens and has no plans to do so.

15%

Housing Pulse