A proposal from a former high-ranking official at S&P Global Ratings to reduce incentives for rating shopping has been met with skepticism and resistance from officials at other rating services. Howard Esaki, the former global head of securitization research at S&P Global Ratings, and Lawrence White, a professor of economics, NYU Stern School of Business, recently published a proposal to reform the process for how rating services are selected to grade MBS and ABS. They said...
Esaki and White propose allowing issuers to choose any number of rating services to submit credit support levels for a particular MBS or ABS, paying a bid-preparation fee for each estimate.
Two months after it was revealed that Fannie Mae would provide $1 billion in financing to single-family rental operator Invitation Homes, certain factions of the mortgage industry are starting to yell “charter creep.” Moreover, the National Association of Realtors and other trade groups are complaining that perhaps Fannie is spending too much of its limited resources helping Wall Street – the Blackstone Group grubstaked Invitation Homes initially – and not enough to help the first-time homebuyer. “What’s...
With the enforcement of the Real Estate Settlement Procedures Act at stake, and a hostile occupant in the Oval Office, the Consumer Financial Protection Bureau is certainly not being bashful about continuing its regulation-by-enforcement modus operandi. The recent enforcement action against Prospect Mortgage is just the latest example. According to Colgate Selden, a partner in the Washington, DC, office of the law firm of Alston & Bird, the case is important because “it indicates the CFPB is moving full-speed ahead regardless” of the recent court rulings in PHH v. CFPB. This case is...
Congress should pass legislation setting uniform standards for qualified mortgages, according to the U.S. Mortgage Insurers trade group. USMI raised particular concerns about differences in the points-and-fees calculation for FHA mortgages compared with the standard for mortgages delivered to the government-sponsored enterprises. As required by the Dodd-Frank Act, the Consumer Financial Protection Bureau established standards for QMs. Certain federal regulators, including the Department of Housing and Urban Development, were allowed to implement QM standards that differed from the CFPB standards. USMI noted...
Although 2017 is expected to be a down year for originations, Freedom Mortgage – already a top-10 ranked lender – is poised for growth via mergers and acquisitions and is pondering deals for both servicing rights and other shops. Company CEO and founder Stanley Middleman told Inside Mortgage Finance bluntly: “We’re shopping.” Although Middleman declined to name any targets, he said...
The Department of Veterans Affairs is considering possible solutions, including new regulation or policy changes, to address the ongoing problem of aggressive refinancing of VA purchase loans. Certain lenders and mortgage brokers apparently are still soliciting VA purchase loans for streamline refinancing despite Ginnie Mae’s effort to stop the practice and help mortgage-securities investors get full return on their investments. Ginnie Mae issued...
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