Whether a given mortgage meets the criteria of a qualified mortgage under the CFPB’s ability-to-repay rule, in and of itself, will not be considered a safety- and-soundness issue, according to joint supervisory guidance issued late last week by federal financial regulators. Nor will QM status – or the lack thereof – be a make-or-break issue in terms of Community Reinvestment Act compliance, the feds added, echoing similar guidance issued back in October. “From a safety-and-soundness perspective, the agencies...
The Conference of State Bank Supervisors called upon Congress to confer small creditor “qualified mortgage” status upon all mortgages held in portfolio by community banks, as part of a larger call to “right-size” federal regulations that disproportionately focus on the risks to huge institutions, at the expense of smaller institutions.One of the primary examples of regulatory relief for smaller institutions has come from the CFPB’s Small Creditor QM rule, the organization said in a white paper released last week. The small...
A mortgage lender’s documentation of compliance with the CFPB’s ability-to-repay qualified mortgage rule is just about as essential as compliance itself, a top industry attorney advised participants in a webinar sponsored by Inside Mortgage Finance Publications last week. And Joseph Reilly, a partner with the BuckleySandler law firm, reached into Zen lore to make his point. “If a tree falls in the forest and no one hears it, does it make a sound?” he asked. Similarly, “Starting in 2014: If a lender complies with ATR/QM but...
Officials from the CFPB and the Federal Reserve held a webinar earlier this month to help small creditors understand qualified mortgage lending under the bureau’s ability-to-repay rule. To begin with, there are two special categories of QMs for small lenders, portfolio QMs and balloon QMs. Also note that the ATR rule provides additional flexibility to small lenders in that the safe harbor has been expanded to 3.5 percent over the average prime offer rate. The first step to determine eligibility – of both the lender...
The Mortgage Bankers Association has put together some guidance, drawn from conversations with CFPB staff, on how to exclude affiliate fees in the points-and-fees calculation for qualified mortgages under the agency’s ability-to-repay rule, which takes effect in just a few weeks. The bureau’s ATR and Home Ownership and Equity Protection Act rules contain a cap or limit on points and fees to qualify as a QM loan and a specific points-and-fees threshold triggering HOEPA coverage. The calculation of points and fees under both of these...
The CFPB and five other federal financial regulatory agencies issued a supplemental final rule last week that creates exemptions from certain appraisal requirements for a subset of higher-priced, higher-risk mortgage loans. The final rule provides that loans of $25,000 or less and certain “streamlined” refinancings are exempt from the Dodd-Frank Act appraisal requirements, which go into effect on Jan. 18, 2014. In addition, the final rule contains special provisions for manufactured homes, which can present unique issues in...
During the first half of 2013, only about $2.05 billion of FHA loans exceeded $625,500, or about 1.5 percent of FHA business, according to Inside Mortgage Finance.
The top Democrat and Republican on the Senate Banking, Housing and Urban Affairs Committee acknowledged this week they will not make their ambitious deadline of clearing a housing-finance reform bill by the end of this year. But the senior lawmakers said they remain “bullish” on moving legislation to the Senate floor sooner rather than later in 2014. Speaking at a Bipartisan Policy Center event, Committee Chairman Tim Johnson, D-SD, blamed “a couple of curveballs,” including the 16-day government shutdown, for falling short of the deadline he and Idaho Republican Mike Crapo set for the committee. The committee did manage to hold 12 hearings on reform and what to do with the two government-sponsored enterprises that have been in conservatorship for a little over five years. “Beyond private capital, we are also working...
The fledgling common securitization platform project isn’t likely to get off course under new Federal Housing Finance Agency Director Mel Watt, but it probably won’t be the new regulator’s pet project either, according to industry advisors and investment bankers tracking the CSP’s trajectory. One thing is certain though: Watt – approved by the Senate just this week – is so new to the job that he’s not likely to make any major speeches or policy statements about the project until sometime in January, at the earliest. Industry officials note...
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