Fannie and Freddie held a combined $252 billion in Alt A and subprime mortgage assets at the end of June, down 18.3 percent from the second quarter of 2013.
CFPB Making Its Presence Felt Among Fannie Mae and Freddie Mac Servicers. Fannie Mae’s latest earning filing indicates the CFPB and/or the New York State Department of Financial Services have been reviewing the activities of Fannie Mae’s three largest non-depository servicers (which would be Nationstar, Ocwen and possibly Quicken Loans, according to the latest ranking by Inside Mortgage Finance, an affiliated publication). The scrutiny of Quicken Loans seems to be a new development. The bureau would not comment. Meanwhile, during the first half of 2014, Freddie Mac said in its second quarter earnings announcement that it implemented requirements for its seller/ servicers in response to some final rules from the CFPB, including rules concerning the requirements for borrowers’ ability to ...
CFPB Student Loan Ombudsman Rohit Chopra is raising the headline risk for banks that fail to be transparent about the campus financial product marketing agreements they have with colleges and universities. In a recent blog post alerting colleges and students about “secret banking contracts,” Chopra indicated the bureau has been mailing out letters to such educational institutions “to make sure they know that their bank partner has not yet committed to transparency when it comes to student financial products” because the financial institution has not yet posted its marketing agreement with the school on its website. Last year, the CFPB launched an inquiry into financial products marketed to college and university students to determine whether the market is working for...
Nearly three-fourths (74 percent) of senior mortgage executives surveyed by Fannie Mae’s Economic and Strategic Research Group in June indicated that they expect operational costs to increase as a result of the CFPB’s ability-to-repay/qualified mortgage rule. Most lenders (80 percent) said they “do not plan to pursue non-QM loans” or prefer to “wait and see”. “Larger lenders are more likely to pursue non-QM loans to increase their market share,” Fannie said. Also, most firms (84 percent) reported that they expect at least 90 percent of their single-family mortgage origination dollar volume to still be considered qualified mortgages. Further, “Lenders, on net, expect to tighten credit standards as a result of QM rules,” according to the government-sponsored enterprise, with 36 percent ...
A number of mortgage finance industry groups have expressed concern about how the CFPB’s ability-to-repay rule is interfering with the return of private investor capital back into the sector – mostly because of the rule’s assignee liability provisions. The industry comments came in response to a request from the Treasury Department in June for suggestions to encourage private capital to return to the non-agency mortgage-backed securities space. The Association of Institutional Investors said the ATR rule’s assignee liability provision “unfairly punishes investors who have nothing to do with the origination of loans and oftentimes have limited insight into the origination practices.” The assignee liability provision therefore introduces a risk that is almost impossible to price for those not directly involved in ...
The Federal Reserve’s latest senior loan officer survey found the CFPB’s ability-to-repay/qualified mortgage rule is not having much of an effect on the conforming mortgage market but is being felt in the jumbo and nontraditional spaces. The July survey included a set of three special questions on the effects on the approval rates for home-purchase loans of the ATR and QM standards under the Truth in Lending Act, which came into effect early this year. The first question asks respondents to indicate the extent to which the ATR/QM rule is affecting the likelihood of their banks approving applications from individuals for mortgage loans to purchase homes for each of four categories of residential real estate loans. [includes one exclusive data chart] ...
In its first case regarding deceptive mortgage advertising, the CFPB has ordered Atlanta-based Amerisave Mortgage Corp., an online mortgage lender, and its affiliate, Novo Appraisal Management Co., to pay $19.3 million in damages and a fine. The consent order settles charges the firms engaged in a deceptive bait-and-switch mortgage-lending scheme said to have harmed tens of thousands of consumers. Of the total payout, $14.8 million will be in the form of refunds to harmed consumers. The companies also agreed to pay a $4.5 million fine. Patrick Markert, the owner of both companies, as an individual, will pay an additional $1.5 million penalty. According to the CFPB, between mid-2011 and 2014, Amerisave advertised its interest rates and terms using online banner ...
Reverse mortgages would be included in Home Mortgage Disclosure Act reports under a proposed rule published recently by the Consumer Financial Protection Bureau. The proposed rule would expand the definition of a “covered loan” under HMDA to include reverse mortgages and home-equity lines of credit (HELOCs), which include reverse mortgages structured as open-end HELOCs. Currently, HMDA regulations do not require reporting of HELOCs, although lenders may do so if they choose. Currently, financial institutions only have to report information on a closed-end reverse mortgage if the transaction involves a home purchase, home improvement or refinancing. Among other things, the CFPB has proposed to require that all reverse mortgages and HELOCs be identified by loan type to distinguish them from other categories of ...
Two industry trade groups expressed support for consolidating Ginnie Mae’s mortgage-backed securities program and creating a new MBS but they are at loggerheads on some of the details. Commenting on the Ginnie Mae proposal, the Securities Industry and Financial Markets Association (SIFMA) and the Mortgage Bankers Association (MBA) said the disagreements are mostly on how to resolve issues related to winding down the Ginnie Mae I MBS program and providing a conversion option for existing securities. “It is clear that further discussion is warranted, and direct engagement with key stakeholders should be beneficial,” the trade groups suggested. Ginnie Mae has received considerable support from a variety of industry players for its “straw man” proposal to shift to a single MBS program based on the existing Ginnie II. The program now accounts for more than 90 percent of all ...
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