Earlier this week, the Consumer Financial Protection Bureau issued a final rule that allows the bureau to supervise for the first time the nonbank servicers of private and federal student loans that qualify as “larger participants” in the student-loan servicing market. With an emphasis on supervision, the rule is not expected to have much of an initial effect upon the secondary market for student loans. But the CFPB’s expanding role into the sector could change that, especially if there is a crisis in student-loan lending. The bureau’s new rule defines...

Underwriting standards for loans in commercial MBS are loosening due to competition among issuers for volume, according to industry analysts. Issuers have also removed loans from two recent commercial MBS transactions due to pressure to come to the market quickly. “Increasing competition among commercial MBS loan originators raises the risk that they will further lower underwriting standards from the more stringent practices used in early second-generation commercial MBS 2.0 deals,” said Tad Philipp, director of commercial real estate research at Moody’s Investors Service. Analysts at Fitch Ratings said...

A Manhattan federal judge last week approved a proposed settlement by bankrupt Residential Capital with the Federal Housing Finance Agency to resolve billions of dollars in claims tied to toxic MBS sold to Fannie Mae and Freddie Mac during the run-up to the financial crisis. Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the agreement, which is tied to a settlement the FHFA reached with Ally Financial, ResCap’s former parent, in late October. Under the agreement, the FHFA will receive...

Ability-to-repay requirements set by the Consumer Financial Protection Bureau could increase losses, liquidation timelines and loan modifications for non-agency MBS, according to Standard & Poor’s. The new requirements take effect Jan. 10 and include assignee liability for certain loans. Liability from the ATR requirements and qualified-mortgage standards are only a concern for non-agency MBS issuers and investors if a borrower defaults. Given the exceptionally strong performance of jumbo MBS issued since 2010, S&P said the threat of higher losses will generally be mild for jumbo MBS. However, performance could eventually decline...

The Financial Accounting Standards Board has begun meeting with various industry groups to get a clearer sense of where it needs to go to develop the most appropriate accounting treatment for to-be-announced transactions. Last Friday, FASB met with both the Mortgage Bankers Association and the Securities Industry and Financial Markets Association to vet some of the board’s tentative decisions on its project for accounting for repos, dollar rolls and TBA transactions, and the likely effect those decisions could have. Meetings with other groups have taken place...

Fannie Mae, Freddie Mac and Ginnie Mae issued a combined $82.33 billion in new single-family MBS during November, according to a new Inside MBS & ABS ranking and analysis. New MBS issuance by the three agencies was off 12.0 percent from October, continuing a steady downturn that’s been under way since April 2013. Production last month was off a whopping 58.7 percent from November 2012, when Fannie and Freddie volume spurted higher as issuers maneuvered to avoid a pending increase in MBS guaranty fees charged by the two government-sponsored enterprises. Tumbling refinance activity was...[Includes two data charts]

A civil complaint filed by W.J. Bradley Mortgage in California state court against a former top loan officer and her new employer could decide what type of contact and other information an LO can take with them when they leave a firm. Since the fall, the WJB suit filed against former company LO Shelly Logemann, her new employer RPM Mortgage, its owners and others has been the talk of mortgage-banking circles in California and elsewhere. The case is being closely watched...

Representatives of community banks and credit unions again told sympathetic members of Congress about the harmful effects they anticipate upon their mortgage business once all of the related rules promulgated by the Consumer Financial Protection Bureau finally kick in come early January. “Every aspect of mortgage lending is subject to new, complex and expensive regulations that will upend the economics of this line of business,” Industrial Bank President and CEO Doyle Mitchell, representing the Independent Community Bankers of America, told members of the House Small Business Subcommittee on Investigations, Oversight and Regulations during a hearing this week. In particular, community bankers are deeply concerned...

Expect the largest U.S. banks to continue to feel the effects of the mortgage implosion as they pony up over $100 billion to get out from under their legacy mortgage litigation issues, according to an analysis by Standard and Poor’s. Since 2009, S&P noted that the big banks – Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo – together have paid or set aside more than $45 billion for mortgage representation-and-warranty issues and have incurred some $50 billion in combined legal expenses. This does not include...

House Financial Services Committee Chairman Jeb Hensarling does not have the votes needed to pass the Protecting American Taxpayers and Homeowners Act in the House and, unless he is willing to be flexible on certain key issues, the package may not reach the House floor at all in this Congress, according to industry lobbyists. Talk that Hensarling, R-TX, may make another push to get the PATH Act to the House floor surfaced this week following an opinion piece he published in the Nov. 27 issue of the Washington Times. In that op-ed, the chairman focused on the bill’s FHA reform component. Hensarling underscored...