In response to a significant amount of public input – and private bellyaching – from the mortgage finance industry, the CFPB last week issued a number of proposed clarifications and revisions to several mortgage rulemakings finalized in January 2013, including changes to those having to do with loan originator compensation. The proposed changes would, among other things, clarify the definition of a loan originator. Under the CFPB’s January 2013 loan originator compensation final rule, persons classified as loan originators...

The Consumer Financial Protection Bureau this weekend proposed limited revisions and clarifications to a number of its mortgage rules. The CFPB proposed allowing originations of certain high-cost balloon mortgages by small lenders to receive qualified mortgage status regardless of where the lenders operate. The CFPB also proposed slightly tweaking an exemption from escrow requirements on certain higher-priced mortgages originated by lenders in rural and underserved areas. To prevent ... [Includes two briefs]

An FHA proposal for new legislative authority to transfer servicing has raised concerns among industry participants, particularly in the Ginnie Mae market. Authorizing the FHA to shift mortgage-servicing rights from one servicer to another could have a ripple effect on Ginnie Mae servicing rights and also adversely impact state mortgage servicing and origination licenses, some say. The bottom line is that Congress should consider FHA’s request for new statutory authority with great care, said Larry Platt, a compliance attorney and a partner at the Washington law firm K&L Gates. “We would hope that ...

The FHA’s tiered system for assessing servicers’ use of loss mitigation tools should serve more as a red flag for increased supervision rather than as a basis for terminating servicing rights, said the Mortgage Bankers Association. Commenting on the FHA’s proposed enhancements to its servicer scorecard, the MBA acknowledged the agency’s responsibility to monitor and hold servicers accountable for poor performance. But while tiered ranking is a good enforcement tool, it can be misapplied, the group indicated. Any ranking system is a good first ...

The Department of Veterans Affairs will soon seek comments on certain proposed rules that would allow VA underwriting guidelines to remain independent of the Consumer Financial Protection Bureau and to also implement a lender scorecard. After a lengthy discussion with the CFPB regarding the “qualified mortgage” rule, the VA said it will propose a rule that would prohibit CFPB’s new underwriting guidelines from superseding existing VA guidelines. The VA feels there is no need for any significant change to its current underwriting rules due to ...

FHA endorsements saw very little improvement in May as mortgage interest rates began to climb, according to Inside FHA Lending’s analysis of FHA data. Total FHA originations rose only 2.4 percent in May to $22.0 billion from $21.5 billion the previous month, and 8.9 percent on a year-over-year basis. Volume was split down the middle between purchase and refinancings, with rates rising from 3.35 percent during the first week of May to 3.81 percent at the end of May. Retail accounted for 81 percent of FHA endorsements, which were mostly 30-year, fixed-rate mortgages. The average interest rate for FHA-insured, 30-year FRMs was ... [1 chart]

Reverse mortgage lenders, consumer groups and certain advocates for the elderly are urging Congress to enact legislation passed recently by the House of Representatives granting the FHA additional authority to govern its reverse mortgage program. Testifying before the Senate Banking Subcommittee on Housing, Transportation and Community Development, the groups said the most productive action Congress can take is to pass H.R. 2167 to allow HUD to make expeditious changes to the Home Equity Conversion Mortgage program through mortgagee letters. The bill, which the House approved on June 12, would ...

Deep-freezing the Home Equity Conversion Mortgage program’s full-draw, fixed-rate standard product apparently has not diminished borrowers’ appetite for reverse mortgages as indicated by a significant increase in HECM originations in the first quarter of 2013. FHA endorsements under the HECM program surged 36.2 percent during the first three months of 2013, with lenders reporting $3.84 billion at the end of the quarter, according to Inside FHA Lending’s analysis of FHA data. Volume was also up a modest 5.3 percent from the same period a year ago. The Department of Housing and Urban Development announced the ... [1 chart]

HUD Explains ‘Good Neighbor Next Door’ Program. The Department of Housing and Urban Development has issued Mortgagee Letter 2013-20 to clarify certain things about the FHA’s Good Neighbor Next Door Sales program. The program allows eligible borrowers to purchase, at 50 percent off the list price, a HUD-acquired single-unit home located in an area that the department has targeted for revitalization. According to HUD, the mortgage insurance premium should be based on the first mortgage only. The agency also clarified the process for allowing interruptions to ...

The recent rapid rise in interest rates has some market participants talking about margin calls on MBS investors, but so far all the chatter appears to be speculative – although there still could be red ink out there, somewhere. At press time, the yield on the benchmark 10-year Treasury had stabilized at 2.54 percent. In mid-May the rate was 1.70 percent. That’s a run-up of 84 basis points. One secondary market official told...