Republic Mortgage Insurance Corp. – which hopes to re-enter the MI space sometime in the next year – on Friday agreed to a $100,000 settlement with the CFPB, settling allegations that it paid illegal kickbacks to lenders for at least 10 years. In a statement, the CFPB said RMIC “provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders. The kickbacks were in exchange for referrals of private mortgage insurance business from the lenders.”...

In a sign of just how serious the CFPB is about steering and loan-compensation issues, the bureau last week pressed Castle & Cooke Mortgage LLC into a settlement involving $9 million in restitution and $4 million in civil penalties to resolve allegations the firm and two of its executives paid illegal bonuses for steering consumers into costlier mortgages. The CFPB alleged that Castle & Cooke, through actions taken by its president, Matthew Pineda, and senior vice-president of capital markets, Buck Hawkins, violated the...

The CFPB’s much-anticipated integrated mortgage disclosure final rule and related forms could be issued as early as Wednesday, Nov. 20, when the bureau plans to conduct a public field hearing in Boston on the mortgage aspect of its broader “know before you owe” initiative. The event will feature remarks by CFPB Director Richard Cordray and testimony from consumer groups, industry representatives and members of the public. The purpose of the forthcoming rule and forms is to integrate and harmonize the mortgage disclosures consumers receive...

The CFPB’s ability-to-repay rule and qualified mortgage standard will have wide-reaching implications for both the primary and secondary U.S. mortgage markets, according to a new report from Fitch Ratings. The ATR rule, which goes into effect Jan. 10, 2014, was drafted to protect borrowers by ensuring that lenders have adequately assessed a borrower’s ability to repay a residential mortgage loan. As a result, “creditors will need to adjust underwriting practices to conform to new QM guidelines and new practices will need to be created and...

The Federal Housing Finance Agency has directed the two GSEs to accelerate their portfolio trimming by focusing on “less-liquid” assets other than their own MBS.

A Miami-based investment management firm, one of the largest junior preferred shareholders of Fannie Mae and Freddie Mac, this week offered to buy and operate the MBS guaranty businesses of the two government-sponsored enterprises with $52 billion of private capital and “a business plan that is sustainable with or without a federal reinsurance plan.” In a four-page letter to Federal Housing Finance Agency Acting Director Edward DeMarco, Bruce Berkowitz, chief investment officer of Fairholme Capital Management, proposed to form two new state-regulated insurance companies to own and operate the assets of Fannie and Freddie “that are relevant to the continuing insurance business.” Under the Fairholme plan, the new MBS guarantors would be capitalized...

It is unclear how much money is needed to recapitalize RMIC, which is currently in a run-off mode, but Old Republic plans to contribute up to $50 million and raise additional funds in the capital markets to resurrect its MI subsidiaries.

A reformed housing finance system should first and foremost put the risk and rewards of mortgage lending in the hands of “private actors,” with the government playing a key role to reduce the impact of the inevitable financial-market failures, “especially when their failures are exacerbated in a cyclical downturn,” an Obama administration official noted this week. Speaking at an Urban Institute event, James Stock, a member of the Council of Economic Advisers, outlined the administration’s central theme of “cyclical resilience” or the need for the mortgage finance system to provide liquidity at “reasonable rates” during both good and bad times. “A cyclically resilient housing finance system provides...

Fannie Mae and Freddie Mac picked the low-hanging fruit first and sold large chunks of their most liquid “less-liquid” assets during the third quarter of 2013 as the government-sponsored enterprises continued to shift their business away from retained investments. The GSEs reduced their combined holdings of commercial MBS by 32.1 percent during the third quarter, according to a new Inside MBS & ABS analysis of their retained portfolios. The Federal Housing Finance Agency has directed the two companies to accelerate their portfolio trimming by focusing on “less-liquid” assets other than their own MBS. The commercial MBS market has been...[Includes one data chart]

The Center for American Progress called on FHFA to keep g-fees at current levels “until there is reliable evidence” to suggest that the government needs more revenue to cover the cost of the guaranty.