Regulations

Browse articles from all of our Newsletters related to Regulations.

May 27, 2016 - IMFnews

Fourth-Ranked Guild Mortgage Will Fight FHA Case; CEO Says Company is a Responsible Lender

The lender allegedly focused on profit and growth at the expense of loan quality and knew about the inefficiencies in 39 of its 125 branches, charges it denies.


May 27, 2016 - Inside MBS & ABS

Trading in TRID Defects (Jumbos Mostly) Still Going Strong. Will the Good Times Ever End?

It was thought that with the Consumer Financial Protection Bureau working on a new regulation to clarify key portions of the TRID integrated-disclosure rule and assignee liability that the scratch-and-dent market in TRID-defective loans would grind to a halt. But that’s not how it’s turned out. According to investors in “S&D” TRID mortgages and traders who play in the space, auctions of mortgages with errors (of all sorts) have continued...


May 27, 2016 - Inside MBS & ABS

Correspondence Between SEC and Redwood Shows That Publicly-Registered MBS Are Subject to Meticulous Scrutiny

Issuers of non-agency MBS willing to issue publicly-registered securities can look forward to thorough reviews by the Securities and Exchange Commission. Redwood Trust filed an updated shelf registration with the SEC this month and the SEC released some of the feedback that went into crafting the issuer’s new Form SF-3. Issuance of publicly-registered non-agency MBS has been minimal since the financial crisis, with issuers seeing pricing in the private 144A market as adequate. Public transactions are subject to more extensive disclosure standards than private deals. An initial letter from the SEC dated Oct. 29, 2014, noted...


May 27, 2016 - IMFnews

GSE Preferred Shareholders Rejoice in Release of New Court Documents. A White House Cover Up?

One of those high-ranking officials is Jim Parrott, former White House housing finance executive...


May 26, 2016 - Inside Mortgage Finance

House Eases LO Employment Transitions; Senate Passes FY 2017 FHA Funding Bill

The House this week approved legislation making it easier for loan officers working for depository institutions to go to work for nonbanks. Separately, the Senate last week approved a $39.2 billion fiscal 2017 funding bill for the Department of Housing and Urban Development. By a unanimous voice vote, House lawmakers approved H.R. 2121, the SAFE Transitional Licensing Act. The legislation provides for a 120-day temporary license for registered loan originators who change jobs and makes for an easier transition when moving from a financial institution to a state-licensed nonbank or to another state. Introduced last April by Rep. Steve Stivers, R-OH, the bill would require...


May 26, 2016 - Inside Mortgage Finance

Mortgage Industry’s Pleas Largely Go Unheeded as DOL Issues Final Rule Regarding Overtime Standards

A final rule issued last week by the Department of Labor updating overtime regulations for white collar employees didn’t include many concessions called for by mortgage industry participants. The final rule sets the standard salary level for exempt executive, administrative, professional, outside sales, and computer employees, referred to as EAP employees, at the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. The final rule effectively doubled the salary white collar workers must be paid to be exempt from receiving overtime pay for working more than 40 hours a week. The new standard will result...


May 26, 2016 - IMFnews

Senior HUD Official Golding Confirms That Downpayment Assistance Loans are Legal

The Golding memo signals that HUD and the IG have reached a meeting of minds on the issue.


May 26, 2016 - IMFnews

TRID Compliance Exams Commence. Does This Mean the ‘Grace Period’ Is Over?

Is it time to worry about the CFPB and TRID compliance exams? Indeed, it is...


May 25, 2016 - IMFnews

OCC Fines Wells Fargo $70 Million for Servicing Issues, Ends Consent Order Dating Back to 2011

Four other banks were released from similar restrictions by the OCC earlier this year...


May 25, 2016 - IMFnews

FHFA’s Watt Happy with FHLB Profits, but Worries About ‘Non-Core’ Assets, Insurers

Litigation settlements, of course, have played a role in the resurgence in profits at Fannie Mae and Freddie Mac, though the legal gravy train is just about over for those two.


May 25, 2016 - IMFnews

Appraisers Balk at FHA Rule Adding Home Inspections; Checking the Pool?

Roofing and attic inspections, verifying whether a pool is operational and safe to use, checking sump pumps for any deficiency and checking crawl spaces elicited groans from appraisers...


May 24, 2016 - IMFnews

Comments Due Aug. 22 on CFPB Arbitration Proposal

The publication of the proposal formally triggers the beginning of the official 90-day comment period. Comments to the CFPB are due by 11:59 p.m. Aug. 22, 2016.


May 24, 2016 - IMFnews

Short Takes: The Industry Strikes Back / Breach of Contract, Not Fraud / A Wingspan Candidate? / BKFS: A 10-Year Low in Foreclosure Starts / PHH Home Hires Former Bank Executive

Bad news for specialty servicers: Black Knight Financial Services said 58,700 foreclosures were started during April, the lowest reading in 10 years...


May 24, 2016 - IMFnews

A Week After Unveiling $300 Million Debt Offering, PennyMac Delays the Deal

According to figures compiled by Inside Mortgage Finance, PMFS is the nation’s sixth largest residential originator, and 11th largest servicer.


May 24, 2016 - IMFnews

House Approves Bill Allowing Temporary License for Loan Originators that Transfer from Banks to Nonbanks

The SAFE Transitional Licensing Act of 2015 had strong support from the Mortgage Bankers Association, The Community Home Lenders Association and other trade groups.


May 24, 2016 - IMFnews

Lenders Anxious About Ongoing HUD IG Audit of Downpayment Assistance…

National Council of State Housing Agencies Executive Director Barbara Thompson said the group is awaiting what she calls a “positive resolution of the issue.”


May 23, 2016 - IMFnews

Short Takes: So Much for the Quiet on TRID Complaints / Mortgage Lenders Lean Toward Trump? / The Last Squeezing of the HARP Grapes / Former Wells Exec Joins Fannie Mae Board

So, who will mortgage professionals vote for come the fall election? Trump or Clinton?


May 23, 2016 - IMFnews

CFPB Experts: Chances of Being Examined Rest in Complaint Portal, Data

Nonbanks primarily need to worry about being examined for lending, but the CFPB has its ears open to servicing complaints as well…


May 23, 2016 - IMFnews

Single GSE Security, CSP Still on Target for 2-Stage Launch; The Cost Thus Far: $270 Million

Although the CSS joint venture has a projected budget and multi-year budget plan, it is working with FHFA about when to release that information…


May 23, 2016 - IMFnews

Ginnie SVP Drayne: Influx of Nonbanks Has Raised A Lot of Issues for the Agency

“We also have to pay more attention to third-party financing and third-party document custodians that new issuers are relying on,” Drayne added.


May 20, 2016 - Inside FHA/VA Lending

Around the Industry

HUD Sends Final Condominium Rule to OMB for Clearance. The Department of Housing and Urban Development has sent a final rule to the Office of Management and Budget that would make it easier for borrowers to obtain FHA financing for certified condominium units. Once issued, the final rule will replace temporary guidance which HUD issued in November last year to ease FHA’s condo approval process. The move is aimed at increasing affordable housing options for first-time and low-income homebuyers. The final rule is expected to reflect measures in the interim guidance, including modification of the requirements for condo project recertification, revised calculation of FHA’s required ownership-occupancy percentage, and expansion of eligible condo-project insurance coverages. IG Scrutinizes HUD Oversight of SFHAs’ Downpayment Assistance Programs. Residential lenders that rely on ...


May 20, 2016 - Inside FHA/VA Lending

VA Clarifies Guidance for Conveying Titled Properties to VA Secretary

The Department of Veterans Affairs has clarified the type of documents lenders would need to provide clear and marketable title for conveyed properties to the VA in all states and U.S. territories. Under VA rules, each conveyance or transfer of real property to the VA shall be acceptable if “the holder covenants or warrants against the acts of the holder and those claiming under the holder (e.g. by special warranty deed).” In addition, the conveyance would be acceptable if it entitles the VA Secretary to such title as is or if it is acceptable to prudent lenders, informed buyers, title companies and attorneys, generally in the community in which the property is located. The VA said its determination of clear and marketable title depends on state statutory requirements. As a general requirement, documents for proper conveyance of clear and marketable title to the VA include the ...


May 20, 2016 - Inside FHA/VA Lending

VA Issues New Servicing Guidance, Reminders on Foreclosures, Others

The Department of Veterans Affairs has issued new guidance and some servicing reminders in connection with mobile-home foreclosures, consent judgments, servicer transfers, liquidation appraisal fees and others. VA servicers must specifically refer to the mobile home in foreclosure declaration documents to ensure that both the home and the land are properly foreclosed, the VA said. Many states require two separate foreclosure procedures for every transaction – one to foreclose the interest on the land and the other to foreclose on the title of the mobile home. The VA said foreclosure on the title of the mobile home may have to be filed with state’s Department of Motor Vehicles (DMV). When a VA loan on a home on wheels is referred to foreclosure, the servicer must inform the foreclosing attorney that it is a mobile home and whether a DMV filing is required. The VA will reconvey the mobile home to the ...


May 20, 2016 - Inside FHA/VA Lending

Trade Groups Urge Congress to Reevaluate Appraisal Oversight

Trade groups representing lenders, homebuilders and appraisers have asked Congress to hold a hearing this year on the future of appraisal regulation. In a joint letter, five industry groups urged the Senate Committee on Banking, Housing and Urban Affairs to reevaluate oversight of the appraisal industry and the current federal regulatory structure for real estate appraisal. The committee last held an appraisal oversight hearing in 2004. Federal appraisal regulations have been untouched since the enactment of the Federal Financial Institutions Reform, Recovery and Enforcement Act of 1989, the trade groups noted. In addition, the groups asked that both federal and state responsibilities be reassessed to see if they continue to serve consumers and market participants well, as well as promote competition in the marketplace. In addition to federal regulation, states regulate appraisers as well. The groups want to know from Congress whether federal oversight of appraisers is still necessary.


May 20, 2016 - Inside FHA/VA Lending

Appraisers Balk at FHA Rule Adding Home Inspection to Appraisals

There is widespread frustration among FHA appraisers regarding the scope of service they are now required to provide under the Department of Housing and Urban Development’s newly revised single-family policy handbook. While the new handbook brought more clarity to FHA’s lending and underwriting policies, certain changes to property-valuation rules appear to have added home inspection to appraisal work – and appraisers and real estate professionals are not pleased. Many of the so-called changes in the handbook already existed, but one change that stood out is the word “must,” said Martin Wagar, a certified broker/appraiser and president of Wagar & Associates. Appraisers are now required to know the basic appliances that come with the home, how to operate them, and to identify and report any deficiency that may affect their “contributory value” to the property, said Wagar at a ...


May 20, 2016 - Inside FHA/VA Lending

FHA Proposes to Codify HECM Reforms, Consumer Protections

The FHA has proposed to codify key improvements to the Home Equity Conversion Mortgage program and add new protections to senior homeowners to ensure they can remain in their homes and enjoy the benefits of an FHA-insured reverse mortgage. The proposed new HECM consumer protections include full disclosure of all HECM loan products and features. Lifetime interest rate increases on HECM adjustable-rate mortgages would be capped at 5 percent, while annual interest-rate increases on HECM ARMs would be limited to 1 percent. Lenders would be required to pay the HECM’s mortgage insurance premiums until the loan is paid in full, foreclosed on, or a deed-in-lieu of foreclosure is executed. In addition, the rule proposes to amend the definition of “expected average mortgage interest rate” to allow lenders, with the agreement of the borrower, to lock-in the rate prior to ...


May 20, 2016 - Inside FHA/VA Lending

Key Lessons for FHA Lenders from M&T Bank, Guild FCA Lawsuits

There are important details in the recent M&T Bank settlement with the Department of Justice and in this week’s announced filing of a lawsuit against Guild Mortgage that could help lenders avoid a potential false claims lawsuit, according to industry observers. The government’s complaints against the two FHA lenders were brought under the False Claims Act, which penalizes acts that intend to defraud the government and taxpayers. The government has been using this powerful statutory tool in the mortgage arena in its attempt to recover FHA losses arising from fraud and noncompliance with agency requirements. As in previous FCA cases against FHA lenders, both M&T Bank and Guild Mortgage were accused of false certification, lax underwriting, poor quality control, failure to review early payment defaults, and failure to self-report deficient loans and remediate problems in a timely manner. In addition, the ...


May 20, 2016 - Inside FHA/VA Lending

Attorneys See Potential Defense In Recent Circuit Court Rulings

Recent circuit court rulings may bolster FHA lenders’ defense against the government’s heavy use of the False Claims Act in FHA lending cases, according to industry attorneys. In the years following the financial crisis, the Department of Justice and the relators bar have used the FCA aggressively to target banks and nonbank mortgage lenders for losses incurred by FHA due to poor underwriting and false certifications. The DOJ and the Department of Housing and Urban Development have recovered billions of dollars through settlements with various mortgage lenders and servicers, using increasingly creative theories of liability to hold them responsible for FHA losses. This week, the DOJ filed a lawsuit in federal court in Washington, DC, accusing Guild Mortgage of improper origination and underwriting of FHA-insured mortgage loans from January 2006 through December 2011. As in ...


May 20, 2016 - Inside FHA/VA Lending

Deconsolidation Opened Credit Access, New Things to Think About

The rapid deconsolidation in the Ginnie Mae issuer community and shift to nonbanks helped expand access for borrowers, but it’s also given the agency new issues to consider, officials said. Back in 2010-11, three Ginnie issuers dominated the program, noted Ginnie Mae President Ted Tozer during the Mortgage Bankers Association secondary-market conference in New York this week. But those three firms now account for just 14 percent of the agency’s business, and nonbanks held a combined 70 percent of the market, he said. Many new firms became issuers in part so they could get away from the credit overlays imposed by the national aggregators, Tozer said. The result is that the average score on a Ginnie loan is now 60 points lower than on loans securitized by Fannie Mae and Freddie Mac, he added. Michael Drayne, senior vice president in Ginnie’s office of issuer & portfolio management, said the ...


May 20, 2016 - Inside FHA/VA Lending

FHA Originations Decline in 1Q16, Production Improves Year-over-Year

FHA activity was lackluster in the first three months of 2016 as loan originations fell 7.8 percent from the prior quarter, according to Inside FHA/VA Lending’s analysis of agency data. The weak first-quarter production of $53.5 billion appeared to continue a trend from 2015, which saw the fourth quarter close with $58.1 billion, down significantly from $73.7 billion in the third quarter. In contrast, FHA originations fared better year-over year. Loan production was up 35.6 percent in the first quarter compared to the same period last year. Purchase lending totaled $36.5 billion in the first three months with overall production trending downward during the period. Borrowers in the 640-679 and 680-719 credit score ranges made up the bulk of new endorsements for January and February, the latest FHA data show. It is unlikely that trend will change even if March endorsements were added. Between all ... [ 2 charts ]


May 20, 2016 - IMFnews

What We’re Hearing: Let the TRID-Compliance Games Begin! / The Central Nervous System = CMS / And Don’t Forget a Parking Space for the CFPB! / JPM Now the Jumbo King / A New MSR Deal From IMA / Where Would the GSEs Be Without Their Legal Recoveries?

Helpful CFPB mortgage audit tip: Set aside a parking space for the visiting CFPB examiner(s) that says, “Welcome, CFPB…”


May 20, 2016 - Inside MBS & ABS

CFPB Arbitration Proposed Rule May Threaten Certain Consumer ABS, Moody’s Analysts Warn

The Consumer Financial Protection Bureau’s proposed rule that aims to effectively end the use of arbitration clauses in U.S financial product contracts will create new risks for ABS tied to consumer loans as well as related financial services companies, according to Moody’s Investors Service. “The fact that the proposed rule would not affect contracts outstanding before it is finalized would lessen its effects initially, as well as over the longer term for contracts on products that typically have long lives, such as credit cards,” analysts from Moody’s said. “Nevertheless, if adopted, the rule would expand legal risks for banks and other financial companies, and could adversely affect some securitizations.” That being said, “Some of the negative effects, however, would be offset...


May 20, 2016 - Inside MBS & ABS

SEC Providing Issuers with an Opportunity to Test Asset-Level Disclosure, Receive Feedback

The Securities and Exchange Commission is allowing MBS and ABS issuers to test asset-level disclosures and receive feedback in advance of requirements that take effect Nov. 23. Through July 15, issuers can request that SEC staff provide feedback on a test filing for compliance with the asset-level disclosure requirements set by the so-called Regulation AB2. The filings will be submitted via the new Form ABS-EE. Under Reg AB2, an ABS issuer that makes an initial bona fide offer on or after Nov. 23, 2016, must provide...


May 20, 2016 - IMFnews

FHFA OIG Lays Claim to $3.5 Billion in Recoveries

The OIG’s investigations also include matters tied to loan origination and short sale fraud and even REO…


May 20, 2016 - IMFnews

Conservative Groups (Surprisingly) Join the Fannie/Freddie Recap Bandwagon

The groups stress that the conservatorships were intended to be a short-term measure to keep the GSEs solvent…


May 19, 2016 - Inside Mortgage Finance

Lenders Anxious About Ongoing HUD IG Audit of State Downpayment Assistance, But Keep Using the Programs

Residential lenders that rely on “downpayment assistance” programs (DPAs) operated by state housing finance agencies are growing nervous about a lengthy and ongoing audit being conducted by the Inspector General of the Department of Housing and Urban Development. Late this week, a spokesman for the HUD IG’s office confirmed to Inside Mortgage Finance that audit has yet to be completed. “It’s getting into the final stages,” he said. “We originally thought it would be done in early 2016.” He stressed...


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 19, 2016 - IMFnews

Short Takes: Guild the Latest Lender to Get Smacked Under the False Claims Act / Major Changes Coming to the Reverse Market? / Impac Executives May be in for a Stock Treat / UI Names CoreLogic Veteran Co-Director

Another week, and another lender sued by DOJ...


May 19, 2016 - IMFnews

GSEs Clarify Their Views on Servicing Compensation

Is it time to take another look at GSE servicing fees? A topic is reborn...


May 18, 2016 - IMFnews

Short Takes: The TRID Mess, It’s Not Quite Over… / NAIHP Chief Doesn’t Hold Back on his Views of the CFPB / United Wholesale Rolls out New Jumbo Product / So Long S.A. / New Hires for Envoy Mortgage

UWM is offering “rate incentives” for jumbo borrowers with FICO scores north of 740, and a promise to close the loan in 25 days or less…


May 18, 2016 - IMFnews

Industry Doubts Trump’s Proclamation on Dismantling of Dodd-Frank Act

DFA also created the Consumer Financial Protection Bureau, an agency that seems almost universally loathed by the mortgage industry.


May 18, 2016 - IMFnews

Is ‘Zero Capital’ for the GSEs Really a Non-Issue?

When Freddie recently unveiled a first-quarter loss due to hedges affected by falling interest rates, MBA chief Dave Stevens issued a statement once again calling for Congress to enact housing-finance reform, but said nothing about the issue of zero capital.


May 17, 2016 - IMFnews

Short Takes: The GSEs Get Religion on Servicing Fees? / A ‘Seminal’ Change? / Oh, Carol. Former FHA Chief Racks Up Ocwen Shares / Searching for Principal Reduction Candidates / A New Hire for Stonegate

“This is a seminal change,” one GSE observer told us.


May 17, 2016 - IMFnews

Private Money Servicer FCI Gets Business from Unlicensed Servicers

At March 31, the Anaheim, CA-based FCI had $4.2 billion of servicing contracts on its books.


May 17, 2016 - IMFnews

Did the CFPB Botch Another Attempt to Clarify TRID?

The attorneys noted: “The CFPB declined to state what the forms do represent, if anything.”


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

Other News in Brief

MBA Calls for New QM Rules, Warns About ‘Regime Change’ Risk. The Mortgage Bankers Association is calling on the CFPB to develop a new qualified mortgage rule because the current one only works because of the so-called “GSE patch.” At the trade group’s annual secondary market conference in New York, MBA President and CEO Dave Stevens noted that Fannie Mae and Freddie Mac currently are approving “a lot” of loans that exceed the benchmark debt-to-income cap of 43 percent that is codified in the current QM rule. That GSE patch disappears in 2021 or when Fannie and Freddie are taken out of conservatorship, whichever comes sooner...


May 16, 2016 - Inside the CFPB

CFPB Looks to Ban Class Action Waivers in Arbitration Agreements

Earlier this month, the CFPB finally issued its long-awaited proposed rule to drastically scale back the ability of consumer financial companies to use pre-dispute arbitration clauses in their contracts for consumer financial products and services. The proposed rule would impose two sets of limitations on the use of pre-dispute arbitration agreements by covered providers of consumer financial products and services. First, it would prohibit providers from using such an agreement to block consumer class actions in court and would require providers to insert language into their arbitration agreements reflecting this limitation. “This proposal is based on the bureau’s preliminary findings – which are consistent with [its earlier] study – that pre-dispute arbitration agreements are being widely used to prevent consumers from seeking ...


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 ...


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