Representatives of the various segments of the mortgage banking world are mostly receptive to a hypothetical “right to cure” an otherwise qualified mortgage loan that inadvertently breeches the QM 43 percent debt-to-income threshold – despite the complexity associated with putting it into play. Most supporters of such a corrective mechanism agreed with the Consumer Financial Protection Bureau that utilizing it could be complicated. “We agree that creditors’ use of any DTI cure provision would be limited. Nevertheless, we do not believe the idea should be dismissed simply because it may be complicated,” the Consumer Mortgage Coalition said in its public comment letter to the agency. The Housing Policy Council of the Financial Services Roundtable also acknowledged...

The recent shift in direct mortgage sales by smaller and nonbank lenders has reduced Fannie Mae’s and Freddie Mac’s concentration risks, but the trend has led to an increase in counterparty credit risk, according to the Federal Housing Finance Agency’s official watchdog. The evaluation report issued this week by the FHFA’s Office of Inspector General said the regulator of the two government-sponsored enterprises needs to monitor Fannie’s and Freddie’s risk-management controls regarding smaller lenders and nonbanks. According to Inside Mortgage Trends, an affiliated newsletter, nonbank sellers accounted...

A new “middle ground” legislative proposal that would replace Fannie Mae and Freddie Mac with a beefed-up Ginnie Mae is getting high marks from industry observers, but lawmakers on both sides of Capitol Hill have no more appetite for housing finance reform this year. The Partnership to Strengthen Homeownership Act, H.R. 5055, sponsored by House Democrats John Delaney (MD), John Carney (DE) and Jim Himes (CT), would create a new Ginnie Mae mortgage-backed security for conventional mortgages. It would have the full faith and credit of the federal government while tapping private sector capital to absorb some of the risk. H.R. 5055 has...

Mortgage industry participants suggest that the Dodd-Frank Act has helped to ensure that problems seen in the mortgage market in 2005 and beyond are unlikely to occur again. However, lenders suggest that the DFA has also limited access to credit for potential borrowers. Four years after the DFA was signed into law, a number of think tanks convened panels this week to analyze its impact. Predictably, consumer advocates are largely happy with the DFA while lenders have more mixed feelings about the law, which created the Consumer Financial Protection Bureau and a landslide of new mortgage regulations. “The mortgage market is...

While legal attempts by city governments to force large banks to pay for the high cost of foreclosure have failed, efforts to resolve the problem in state legislatures appear to be making headway. The City of Miami suffered consecutive defeats in three of the four lawsuits it filed against major banks after a federal district court judge dismissed all three because of the city’s lack of standing to bring suit under the federal Fair Housing Act. U.S. District Court Judge William Dimitrouleas dismissed...

"Buying loans from some nonbanks could damage the enterprises' reputations," the FHFA IG says.

“In essence, defendant asserts that the court should merely take its word that the documents – some of which defendant itself has not reviewed – are privileged,” wrote Sweeney. “This suggestion runs contrary to law.”

The American Bankers Association said its members were not able to clearly identify instances where a DTI cure mechanism would be useful in the normal course of bank operations.

So far, the only notable skunk at the second quarter origination party has been JPMorgan Chase which reported a 1 percent decline in fundings compared to the first quarter.

According to an Inside Mortgage Finance analysis of loan-level data on mortgage-backed securities from the GSEs, underwriting standards on mortgages have loosened only slightly over the past year.