Just three months before the deadline for finalizing a highly controversial rule requiring lenders to determine a borrower’s ability to repay, the Consumer Financial Protection Bureau still has not decided the key issue of how much legal protection lenders will get by meeting the still-undefined “qualified mortgage” standard. And the CFPB’s top official said the legal insurance blanket preferred by most mortgage lenders and their attorneys – a safe harbor, rather than a rebuttable presumption – may not provide as much protection as the industry is hoping for. “The safe harbor versus rebuttable presumption comparison is...

A proposed move by Fannie Mae to cap its loan purchases from new lenders and servicers contingent on the lenders’ net worth, among other factors, is rife with unintended consequences and should be examined closely before the company takes final action, say industry officials. A spokesman for the government-sponsored enterprise confirmed that Fannie is looking to change how it conducts business with “unfamiliar” lenders in response to the “significant contraction” among the correspondent buyers in the secondary market. The consequence of the contraction has led to growth in the number of lenders seeking to do business directly with the GSE. “Many of these newly approved lenders are...

Home-purchase mortgage activity, which dropped to a 15-year low in 2011, may be finally showing some signs of life in 2012. Thanks to very low mortgage rates and increased consumer confidence in home prices, a growing number of homebuyers – particularly current homeowners – are now taking out mortgages. In fact, the use of conventional conforming mortgage financing among homebuyers climbed to a two and a half year high in August, according to numbers released this week by the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. “Conventional mortgages are...

The Consumer Financial Protection Bureau is pushing full-speed ahead with its probe of the mortgage industry’s use of captive reinsurance by directing PHH Corp. to comply with an earlier civil investigative demand – the functional equivalent of a subpoena – within three weeks, brushing aside the company’s numerous objections. “PHH’s petition to modify or set aside the CID in this matter is denied,” CFPB Director Richard Cordray ruled last week. “Within 21 days of this decision and order, PHH is directed to produce all responsive documents, items and information within its possession, custody or control that are covered by the CID.” Cordray added that PHH is...

The proposal by Fannie Mae’s and Freddie Mac’s regulator to levy extra guaranty fee charges on government-sponsored enterprise mortgages originated in five states that have unusually slow foreclosure timelines not only adds to the problems faced by small lenders but it’s also less than clear that it would be an effective part of the solution, say industry executives. If implemented as proposed, the Federal Housing Finance Agency would target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot guaranty fee of between 15 and 30 basis points that would take effect in 2013. “The size of the fee adjustments are intended...

The single-family mortgage market continued to shrink during the first half of 2012, registering the 13th consecutive quarterly decline in mortgage debt outstanding since early 2008. The Federal Reserve reported late last week that there were $10.028 trillion of single-family mortgages outstanding at the end of June. That was down 0.5 percent from the previous quarter and represented a cumulative 10.3 percent drop since March 2008. The supply of home mortgage debt fell to its lowest level since the midway point in 2006. There are two growth sectors, however. The supply of Ginnie Mae single-family servicing surged...[Includes one data chart]

Old Republic International Corp. is seeking state regulators’ approval of a revised run-off plan for its mortgage guaranty unit, Republic Mortgage Insurance Co., which proposes to pay 60 percent of all settled mortgage-insurance claims, up from 50 percent, and defer the remaining 40 percent until claim reserves are sufficient to pay the balance in full. The North Carolina Department of Insurance, RMIC’s primary regulator, is reviewing the so-called 60-40 corrective plan, which ORIC wants to remain in place at least through Dec. 31, 2021, while RMIC continues to operate under supervision of state regulators. The plan is designed...

Bank of America and its home loan servicing unit were accused of maintaining and marketing foreclosed homes in white neighborhoods in a much better manner than in African-American and Latino neighborhoods, in a complaint filed this week by the National Fair Housing Alliance. The investigation of 373 foreclosed homes owned or managed by BofA found the company “has engaged in a systemic practice of maintaining and marketing its foreclosed, bank-owned properties in a state of disrepair in communities of color while maintaining and marketing REO properties in predominantly white communities in a far superior manner,” the NFHA said. The complaint was filed with the Department of Housing and Urban Development by the NFHA and five other groups. The housing advocacy groups reviewed...

Fannie Mae and Freddie Mac would levy extra guaranty fee charges on mortgages securing property in five states to account for the increased cost of foreclosures in those states under a proposal outlined this week by the Federal Housing Finance Agency. The FHFA proposes to target five states – Connecticut, Florida, Illinois, New Jersey and New York – for an additional, one-shot guaranty fee ranging from 15 basis points to 30 bps. “The size of the fee adjustments is intended to reflect the disparity in costs, as compared to the national average,” explained the FHFA. The five states were...

Fannie Mae’s High Touch Servicing Program, an initiative that utilizes specialty servicers to deal with at-risk borrowers to help reduce the number of defaults, is basically sound, but there are some issues with controls and cost savings, a new inspector general’s report found. “An internal audit conducted by Fannie Mae raised questions about the controls surrounding the High Touch Servicing Program, as well as the likelihood that it would achieve the projected savings,” the Federal Housing Finance Agency Office of Inspector General said in a report issued this week. “Fannie Mae relied...