The combination of weak legal protection, a narrow definition of “qualified mortgages” and growing use of the disparate impact theory of lending discrimination is creating rifts in the mortgage banking industry and leading some companies to pull back or abandon the market altogether. The ability-to-repay rule being developed by the Consumer Financial Protection Bureau was arguably the most talked-about issue at this week’s secondary market conference held by the Mortgage Bankers Association. Its two major ingredients are a definition of qualified mortgages – loans that are underwritten to certain...

Although there are signs that the clouds may be lifting over the five-year housing recession, mortgage lenders face unrelenting pressure from investors to repurchase loans or cover their losses. Some buyback requests are legitimate and should be honored, said David Stevens, president and CEO of the Mortgage Bankers Association, during a speech at the trade group’s secondary market conference in New York this week. “But lenders are finding more and more loans being sent back for repurchase for minor, technical mistakes that had questionable relevance to loan performance,” he said. The threat of repurchases...

The Consumer Financial Protection Bureau is putting together a group of small businesses related to the mortgage lending industry to brief them on the CFPB’s pending proposed rule on discount points and fees paid to mortgage originators and to gather initial industry input on the subject. Senior officials told the press this week they are assembling a panel per the Small Business Regulatory Enforcement Fairness Act, which requires the CFPB to convene a small business panel before rolling out regulations that the bureau expects to have a significant impact on a substantial number of small business...

Although agency mortgage securitization gobbles up a huge share of new home loan originations, jumbo mortgages, home-equity loans and nontraditional mortgage sectors are largely held in retained portfolios that have to be carefully managed, experts say. “Your loan portfolio is incredibly important,” said Jerry Hubbard, president of FTN Financial Capital Assets Corporation during a panel at this week’s Mortgage Bankers Association Secondary Market Conference. “Your consolidated portfolio is three to four times bigger than an investment portfolio. It’s the most important asset on the books...

In an effort to aggressively expand the recently retooled Home Affordable Refinance Program, Fannie Mae is encouraging lenders to make the most of HARP 2.0’s looser rules on marketing directly to eligible borrowers. The government-sponsored enterprise created “outreach materials” to help jump-start lenders’ marketing efforts to would-be borrowers who aren’t aware they may qualify for a HARP refinance. “Fannie Mae developed these model ‘HARP Materials’ to facilitate borrower consideration of HARP refinancing options that may be available through participating lenders and servicers...

The volume of commercial mortgages in special servicing has continued to decrease since its peak, with more loans getting transferred out than loans transferred in, thanks in great part to a large number of loan resolutions, says a new report on commercial MBS by Fitch Ratings. Special servicers decide whether to liquidate loans or modify them, with all active special servicers ultimately liquidating a larger proportion of loans than returning them to master servicing, according to the Fitch report. In total, 71 percent, or 4,160 loans, were liquidated while 1,672 were returned to master servicing. Of...

The Federal Housing Finance Agency is still mulling over accepting principal reduction payments from the Treasury Department even as the debate between the factions for and against GSE loan writedowns is quickly dissolving into a partisan food fight. This week, two ranking House Republicans urged FHFA Acting Director Edward DeMarco to stand fast against mounting political pressure directed at him by the Congressional allies of the Obama administration as House Democrats took the gloves off, accusing the Finance Agency of falsely withholding pertinent information about the agency’s principal reduction analysis.

Dividend payments paid by Freddie Mac to the U.S. Treasury for its continued financial support held down the GSE during the first quarter of 2012 as Freddie would have otherwise posted a profit. Freddie, which posted its first quarter results late this week, actually reported $577 million in net income during the first three months of this year before having to repay $1.8 billion in preferred stock dividends to the government. Under the terms of the GSEs’ purchase agreement, the Treasury is entitled to a dividend of 10 percent per year on a quarterly basis. Freddie’s first quarter dividend payment more than offset the company’s comprehensive income of $1.79 billion, prompting the GSE to seek another $19 million from taxpayers.

The GSE executive exodus continued last week with the announcement that the executive who oversees Freddie Mac’s single-family mortgage business has resigned. Anthony Renzi, Freddie’s executive vice president of single-family business, operations and information technology, will leave the company effective May 11, according to a filing with the Securities and Exchange Commission. Renzi, who came to Freddie after being forced out of GMAC Mortgage in April 2010, will join Citigroup Inc. as its new chief operating officer. The company said Paul Mullings, senior vice president of single-family sourcing and securitization, will take over Renzi’s duties on an interim basis.

Inspired by a law currently on the books and in dispute in Chicago, state lawmakers in Illinois have filed a vacant property registration law requiring mortgage holders to keep up homes in foreclosure or face costly fines. The bill, SB 16, outlines a framework for municipalities to pass vacant property ordinances requiring mortgage holders to register a property that has been vacant for more than 30 days and to re-register the property every six months. The mortgage holder would also be required to secure and maintain the property, with fines ranging from $500 to $1,000 per day if the requirements are not met.