The Association of Mortgage Investors recently detailed a number of issues involving the TRID disclosure rule that have been uncovered in pre-purchase due diligence reviews on non-agency mortgages. The example errors were included in a letter from the AMI to the Consumer Financial Protection Bureau, which designed and mandated the new disclosure based on requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act. “In the near term ...

A single mortgage must meet nearly 150 requirements to achieve compliance with the TRID disclosure rule, according to a framework proposed by members of the Structured Finance Industry Group. Third-party due diligence firms will test loans for most of the TRID requirements, according to a draft of the TRID compliance review scope obtained by Inside Nonconforming Markets. Since the TRID rule took effect in October, due diligence firms have found widespread violations ...

The volume of interest-only mortgages originated in 2015 increased compared with the previous year, according to a new ranking by Inside Nonconforming Markets. IOs appear to be the most common type of non-qualified mortgage currently being offered by lenders. A group of 12 lenders originated $29.56 billion in IOs in 2015, up 8.5 percent compared with the previous year. The loans fell outside of QM standards set by the Consumer Financial ... [Includes one data chart]

Fitch Ratings revised its criteria for rating non-agency mortgage-backed securities backed by non-qualified mortgages last week. The new standards set the stage for Fitch to rate nonprime non-QM MBS. The new non-QM criteria from Fitch include expanded product assumptions for rating nonprime mortgages and loans to self-employed or non-wage-earning borrowers. When determining litigation liability, Fitch said it will make a distinction between non-QMs for “very high ...

As interest-only mortgages originated in the run-up to the financial crisis reset, performance has varied depending on the extent of borrowers’ payment shock, according to analysts at Bank of America Merrill Lynch. The analysts noted that delinquencies increase significantly when an IO borrowers’ monthly payment more than doubles, while some borrowers with strong credit or low loan-to-value ratios have been able to refinance or receive a loan modification. IOs include a ...

Sen. Elizabeth Warren, D-MA, used a hearing by the Senate Banking, Housing and Urban Affairs Committee this week to highlight the Federal Reserve’s lack of action on subprime mortgages prior to the financial crisis of 2008. Leonard Chanin, currently of counsel at the law firm of Morrison & Foerster, took the brunt of Warren’s criticism. He was deputy director of the division of consumer and community affairs at the Federal Reserve and helped lead the division from ...

A district court of appeals in Florida ruled in favor of a borrower this week in a case involving a foreclosure on a mortgage in a non-agency mortgage-backed security. The District Court of Appeal of the State of Florida, Fourth District, found that the trustee on a non-agency MBS issued by Bear Stearns in 2006 didn’t have the proper documentation to complete a foreclosure initiated in 2009. “An exhibit filed during the trial contained no indication that ... [Includes three briefs]

Ginnie Mae issued $93.41 billion of single-family mortgage-backed securities during the first three months of 2016, an 8.6 percent drop from the previous quarter, according to a new Inside FHA/VA Lending analysis of loan-level MBS data, excluding FHA reverse-mortgage activity. Early 2016 was the slowest market in a year for Ginnie MBS production, though it still was stronger than most of the agency’s pre-2015 business. And issuance in the first quarter of 2016 was 17.0 percent ahead of the volume produced during the same period last year. The soft spot in the first quarter was FHA lending, especially purchase-mortgage activity. Issuers delivered $54.44 billion of FHA loans into Ginnie MBS during the period, a 12.1 percent drop from the fourth quarter, including a 15.0 percent decline in FHA purchase mortgages. Securitization of VA loans fell by a ... [4 charts].

Approximately 300 FHA lenders are seeing their recertifications held up because they failed to report in a timely manner events or changes that may affect their eligibility to participate in FHA programs.Delays are occurring because lenders have failed to notify the FHA of material events as soon as they have occurred and waited until the annual recertification to report them, according to industry sources. Under rules of the Department of Housing and Urban Development, a notice of material event alerts the agency to a significant change to the information provided by the lender at application that may affect its status as an FHA-approved lender. The department strongly encourages lenders to notify FHA within 10 days of the event to prevent delays during the annual recertification. Each FHA lender must complete the annual recertification process in order to retain its FHA approval. Lenders must ...

Policy changes are underway to prevent nonprofit groups from gaining an unfair advantage over legitimate investors in purchasing real estate-owned properties under the Department of Housing and Urban Development’s single-family property disposition program. An audit conducted by the HUD inspector general found that certain nonprofits were acting as investors while purchasing REO homes through HUD’s distressed-asset sales program. While this may seem to be a case of nonprofits gaming the system, the IG said no regulations were violated because program requirements did not explicitly bar nonprofits from acting as investors during the exclusive listing period. HUD’s distressed-asset sales program is designed to clear the department’s REO inventory in a manner that expands homeownership opportunities, strengthens neighborhoods and communities, and ensures a ...