As the Consumer Financial Protection Bureau’s forthcoming ability-to-repay/qualified mortgage rulemaking continues to keep the mortgage lending community up at night, talk of a compromise legal standard has moved beyond the zero-sum/either-or approach that would involve either a rebuttal presumption or a safe harbor. Speaking at the North Carolina Bankers Association’s American Mortgage Conference in Raleigh, NC, last week, some industry representatives suggested it could be both – or more precisely, first one and then the other...

Missouri. The St. Louis County Council recently approved Councilwoman Hazel Erby’s Mortgage Foreclosure Intervention Code, which will require mortgage lenders to offer homeowners foreclosure mediation for all homes with loans in default in the county. Mortgage lenders will be required to pay for mediation services between themselves and the homeowners; defaulted homeowners have 30 days to respond in writing to a notice of mediation from the mediation coordinator. Erby introduced the code in response to the nearly 2,000 homes...

Consumer Financial Protection Bureau. Community Bank Advisory Board Established. The Consumer Financial Protection Bureau last week named 13 individuals to serve on its new Community Bank Advisory Council, which is to meet an estimated four times a year to provide information, analysis, and recommendations on the bureau’s regulation of consumer financial products and services. Its first meeting has been scheduled for Oct. 10, 2012. Credit Union Advisory Board Set Up. The CFPB last week publicized its selection of 15 credit union...

Bank of Commerce Holdings in Redding, CA, has bailed out of the mortgage-making business in the face of tighter and more demanding regulatory oversight. The bank recently sold off its 51 percent stake in Bank of Commerce Mortgage, which it acquired in 2009, to the partners of Simonich Corp., who already owned the other 49 percent.The agreement provides for a continued relationship between the two companies on the funding side and puts both parties in the best position to pursue their core competencies, the firms said...

A ranking Republican on the House Financial Services Committee this week gave notice that GOP lawmakers will be looking to rein in the Federal Reserve’s “radical” and unfettered influence and authority over the nation’s financial system during the 113th Congress next year. Rep. Scott Garrett, R-NJ, chairman of the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises, outlined his two top priorities for Congress in 2013 just as the Federal Open Market Committee announced plans to add about $40 billion a month to its massive agency MBS portfolio. Garrett said the committee’s first priority will be...

The mortgage securitization rate through the first half of 2012 was down a few ticks from the record level reached in the first quarter of the year, but the market remained dominated by lending for Fannie Mae, Freddie Mac and Ginnie Mae MBS programs. A huge 91.5 percent of new mortgage originations were financed through the agency MBS programs during the first half of 2012, according to a new Inside MBS & ABS analysis. That’s down from the 95.8 percent securitization rate achieved in the first quarter, but it’s comfortably ahead of the securitization rates posted since the financial crisis of 2008. The sky-high securitization rate is partly due...[Includes one data chart]

Redwood Trust offered no surprises in its fourth jumbo MBS of the year, a $313.2 million deal that closely resembles the six previous transactions the firm has issued since pioneering the rebirth of the non-agency market back in 2010. With squeaky clean collateral and an investor-friendly securitization structure, Sequoia Mortgage Trust 2012-4 includes three triple-A classes totaling $290.4 million that will be supported by 7.30 percent credit enhancement. That’s the same level as in Redwood’s previous deal, significantly lower than the 8.25 percent enhancement on its first 2012 transaction and slightly above the 7.15 percent level on its second deal this year. In several areas, the latest Redwood MBS includes...

The Securities and Exchange Commission has decided to set aside efforts to standardize credit ratings due to serious concerns raised by credit rating agencies and other market participants. Instead, the SEC said it will focus on rulemaking under the Dodd-Frank Act to achieve transparency in credit rating performance and in the methods used to determine credit ratings. In a mandated report to Congress on the standardization of credit ratings, the SEC said...

A ruling last week regarding the purchase of $440,000 of non-agency MBS in late 2007 and mid 2008 appears to have significantly expanded liability for non-agency MBS issuers. The ruling expands liability beyond trusts specifically purchased by investors to potentially all trusts in an issuer’s shelf with mortgages originated by the same lenders. The decision by the U.S. Court of Appeals for the Second Circuit on NECA-IBEW Health & Welfare Fund v. Goldman Sachs overturned a 2010 ruling by the district court which had dismissed the case. “The Second Circuit’s decision in this case not only represents...

In a reversal apparently targeted at reducing criticism of its plan, Mortgage Resolution Partners late last week announced that it would include delinquent mortgages in its eminent domain scheme. The firm also strongly defended its proposal in a comment letter sent to the Federal Housing Finance Agency. “After discussions with local governments across the country, MRP will expand the services it provides to cover all loans [in non-agency MBS], not just those that are current,” said Graham Williams, CEO of MRP. “This will enable local governments to acquire and resolve the greatest number of loans, helping the greatest number of homeowners.” The expansion was announced the same day comments were due...