Last week, the Consumer Financial Protection Bureau issued a proposed rule in the Federal Register that would amend Regulation Z and Regulation X to implement the Dodd-Frank Act’s amendments to the Truth in Lending Act and the Real Estate Settlement Procedures Act, respectively. Specifically, the bureau is proposing to amend Reg Z to implement the Dodd-Frank amendments that would expand the Home Ownership and Equity Protection Act to apply to more types of mortgage transactions. Under the proposed rule...

All nonbank residential mortgage lenders and originators now must be in compliance with the Financial Crime Enforcement Network’s final rule requiring the establishment of anti-money laundering programs and the filing of suspicious activity reports. On Feb. 14, 2012, FinCEN published in the Federal Register its final rule on anti- money laundering program and suspicious activity report filing requirements for residential mortgage lenders and originators. The effective date of this rule was April 16, 2012, and the...

The Conference of State Bank Supervisors has begun making available public state regulatory actions on the Nationwide Mortgage Licensing System Consumer Access online portal. In addition, NMLS Consumer Access now directly connects the public to state agencies for the purpose of submitting a consumer complaint on a state-licensed company or individual loan officer. This latest upgrade consolidates enforcement actions taken by state regulatory agencies against state-licensed companies and individuals in a single repository...

Consumer Financial Protection Bureau. Agency Creating Interactive Regulatory Forum. The Consumer Financial Protection Bureau is working with the Cornell University e-Rulemaking Initiative (CeRI) to make it easier for the public to comment on mortgage servicing proposed rules through a pilot project called Regulation Room (www.regulationroom.org). “Regulation Room provides an online environment for people and groups to learn about, discuss and react to selected rules proposed by federal agencies,”...

Lenders Compliance Group Inc., a mortgage risk management firm for mortgage lenders, has formally launched the Brokers Compliance Group, a full-service, mortgage risk management firm in the U.S., specializing in outsourced mortgage compliance and offering a full suite of services to residential mortgage brokers. “Together, Lenders Compliance Group and Brokers Compliance Group will build on existing tools, processes, experts, risk assessments, and resources to provide a ‘best practices’ approach to residential mortgage compliance,”...

The Federal Housing Finance Agency became the biggest opponent of proposals for local governments to use eminent domain to seize underwater loans from non-agency mortgage-backed securities. “FHFA has determined that action may be necessary on its part to avoid a risk to safe and sound operations at its regulated entities and to avoid taxpayer expense,” the conservator of the government-sponsored enterprises said in response to the proposed use of eminent domain to forgive principal on mortgages ...

Bank and thrift holdings of residential MBS changed very little in the second quarter of 2012, although the portfolios of several of the biggest depository institution investors revealed substantial changes from the previous period. A new Inside MBS & ABS analysis of call report data showed a 1.5 percent decline in total residential MBS held by banks and thrifts during the second quarter. After hitting a record $1.634 trillion as of the end of March, banks and thrifts reported $1.610 trillion in MBS in their held-to-maturity and available-for-sale portfolios as of the end of June. Even with the decline since March, bank and thrift MBS holdings were...[Includes two data charts]

The securities industry may be winning the battle to convince local governments not to use eminent domain to seize performing underwater mortgages from non-agency MBS pools after Chicago Mayor Rahm Emmanuel and other elected officials expressed their opposition to or reluctance about the controversial concept. “I don’t think it’s the right way to address the problem,” Emanuel told the Chicago Tribune this week after the city’s Joint Committee on Finance and Housing and Real Estate held a hearing to discuss the plan. “I think there are other places to do it. I don’t think it’s the power of the city to do, to deal with the housing issue. We have a national issue. I think we have to address the issue. I just don’t think that’s the right instrument.” Several members of the Chicago joint committee also expressed...

Secondary mortgage market participants have expressed support for the Consumer Financial Protection Bureau’s efforts to establish clear standards for mortgage servicing that would balance investor and borrower interests. Issued last week, the proposed rules focus primarily on borrower protection and are described as measures that would benefit borrowers by eliminating surprises and run-arounds. However, they do not address servicers’ conflicts of interest that result in servicer breaches, which mortgage-backed securities investors have raised in the past, and other investor complaints. Specifically, the proposed rules implement...

Standard & Poor’s announced late last week that it updated the criteria for ratings on non-agency MBS with mortgage collateral originated before 2009. The new standards are effective immediately and will result in significantly more downgrades than upgrades, according to S&P analysts. The standards update criteria for credit, cash flows and rating stability, and introduce new methods for analyzing transactions that have fewer than 100 loans remaining in the pool. Vandana Sharma, a managing director and lead analytic manager for U.S. residential MBS ratings at S&P, said the new standards reflect key market trends. “In light of the stabilization of home prices and delinquencies in the U.S. mortgage market, these criteria seek...