Third-party oversight is becoming more of a focus of regulators these days, according to some top compliance professionals, and one of the most important emerging themes is an increasing regulatory emphasis on staff expertise. “This is something that [all the regulators] are thinking about,” Krista Shonk, vice president and senior regulatory counsel at the American Bankers Association, said during a presentation early last week at the ABA’s annual regulatory compliance conference in Orlando. Staff expertise includes things such as the ability to perform proper due diligence analysis and contract management and oversight.But personnel also need to avoid any attempts to transfer their institution’s inherent responsibility for compliance with laws and regulations. On the other hand, lenders should not put ...
Mortgage repurchases and indemnifications on loans sold to Fannie Mae and Freddie Mac surged higher in the first quarter of 2017, according to a new Inside The GSEs analysis of disclosure reports filed with the Securities and Exchange Commission. Sellers repurchased or indemnified the GSEs for losses on $238.6 million of home loans during the first three months of the year. That was up 15.1 percent from the fourth quarter of 2016. But it’s a drop in the bucket compared to the amount of single-family business Fannie and Freddie do. In 2015, for example, the two GSEs issued $824.76 billion of single-family mortgage-backed securities.
The Treasury Department said the so-called GSE patch gives Fannie Mae and Freddie Mac an unfair advantage in the mortgage market, and it recommended eliminating this exception to the qualified-mortgage rule. In a financial regulations report released this week, the Treasury detailed a host of executive actions and regulatory changes that it believes can immediately stimulate economic growth, increase capital access and protect taxpayers. Adjusting and clarifying the ability-to-repay/qualified mortgage rule and phasing out the GSE patch are among those changes listed. The GSE patch, created under Dodd-Frank, allows GSE eligible loans to qualify for QM status, even if the DTI exceeds the standard 43 percent ratio.
In an unusual twist, the Federal Housing Finance Agency included legislative recommendations in its annual report to Congress submitted this week. First, the agency urged lawmakers to take up housing-finance reform legislation, a call FHFA Director Mel Watt has made numerous times, including in a recent hearing on Capitol Hill. The regulator declined to address any of the major policy issues that would arise from comprehensive reform, as it has in the past.The FHFA also reiterated suggestions that Congress address statutory provisions that inhibit the ability of certain investors, such as real estate investment trusts, from participating in credit-risk transfer transactions.
Eight national housing and civil rights groups joined forces and penned a letter to lawmakers urging them to oppose any legislative efforts that would do away with the GSEs’ affordable housing goals. The letter was sent to Senate Banking, Housing and Urban Affairs Committee Chair Mike Crapo, R-ID, and ranking member Sherrod Brown, D-OH, last week, in response to recent recommendations to eliminate affordable housing goals as part of moving housing finance reform legislation forward.“This misguided attempt is not new and it would harm creditworthy borrowers who cannot access the mortgage credit they desire,” said the organizations, which include the Center for Responsible Lending, National Fair Housing Alliance and National Urban League.
The extended deadline for input on the Federal Housing Finance Agency’s GSE ‘duty-to-serve plans closed last week with about a dozen comments, including one from the Mortgage Bankers Association. Some commenters were concerned that the evaluation guidance may be too light when it comes to promoting real impact. The proposed guidance was released in January to communicate the FHFA’s expectations on developing and evaluating the GSEs’ three-year underserved market plans. The Fannie Mae and Freddie Mac regulator issued an RFI to get feedback from the industry on how the agencies will evaluate the plans. One of the methods is to annually produce a rating for each GSE’s implementation and impact on each of the three underserved markets, including...
The Federal Housing Finance Agency adopted a final rule this week that lets non-federally insured credit unions become Federal Home Loan Bank members as of July 5, 2017. Until recently, state-chartered credit unions that weren’t federally insured by the National Credit Union Administration were ineligible for membership in the FHLBank system, unless they qualified as community development financial institutions. But in December 2015, Congress enacted the Fixing America’s Surface Transportation (FAST) Act, which included amending the FHLBank Act to permit non-federally insured credit unions (NFICUs) to become FHLBank members as long as certain requirements are met. NCUA provides the same insurance coverage on deposits as the Federal Deposit Insurance Corp. that insures bank deposits.
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