The Government Accountability Office recently confirmed the view widely held in the mortgage finance industry that federal regulators are not doing enough to analyze the cost and other effects of implementing the Dodd-Frank Act. “Little is known about the actual impact of the final Dodd-Frank Act rules, given the short amount of time the rules have been in effect,” the GAO said. The government watchdog noted that federal financial regulators are required to perform a variety of analyses, but the requirements vary and none of the regulators are...

A significant drop in the FHA’s Mutual Mortgage Insurance Fund’s excess capital reserve has renewed calls for a smaller FHA and a limited government role in the mortgage market, even as opponents argued for the agency to remain on track and continue insuring high-quality loans. The annual actuarial report on the condition of the MMI Fund released this week revealed that the fund’s capital reserves dropped from 0.50 percent at the end of fiscal 2010 to 0.24 percent as of the end of September, the close of the government’s 2011 fiscal year. The program is required to have minimum capital reserves of 2.00 percent. The FHA was...

The new system built by the Consumer Financial Protection Bureau to process consumer complaints about their mortgages needs to be fixed before it becomes operational, industry groups say. In a joint letter to the CFPB, the American Bankers Association, Consumer Bankers Association, Financial Services Roundtable and its Housing Policy Council and Mortgage Bankers Association said the bureau should consult with financial services companies, which have in place a range of systems to address consumer complaints. “We believe that CFPB should provide a more transparent process that allows all stakeholders...

Slashing the pay of Fannie Mae and Freddie Mac executives would almost certainly lead to an accelerated brain drain and increased losses that would have to be covered by taxpayers, said the heads of the two government-sponsored enterprises and their regulator during hearings on Capitol Hill this week. It’s a tough sell. The House Financial Services Committee this week approved legislation to suspend bonus payments to top GSE officials and move Fannie and Freddie to a government pay scale. Federal Housing Finance Agency Acting Director Edward DeMarco appeared before the Senate Banking, Housing and Urban...

Although some changes under the revised Home Affordable Refinance Program will take effect as early as next month, key features such as automated underwriting and new securitization executions will not be available until well into 2012. Observers found no surprises in the HARP 2.0 seller-servicer bulletins issued this week by Fannie Mae and Freddie Mac, and most expect only a modest expansion in program activity. In many cases, the new rules reflect a standardization of the existing programs offered by the government-sponsored enterprises. Among the new changes are a lifting of the existing 125 percent...

The Obama administration this week proposed a new rule that would establish uniform procedures for the resolution of disparate impact allegations under the Fair Housing Act at a time when the whole legal underpinnings of disparate impact are slated for review by the U. S. Supreme Court. In a proposed rule that has been in preparation for months, the Department of Housing and Urban Development argued that it has the authority to apply the disparate impact theory of discrimination in the context of fair housing, including fair lending charges. The purpose of the proposed rule, HUD says, is to clear up uncertainty about...

Despite several high-profile retreats from the wholesale production channel in recent months, the mortgage industry was pressed to rely more on mortgage brokers and correspondents to meet the increased consumer demand for refinance loans during the third quarter. A new Inside Mortgage Finance analysis and ranking reveals that wholesale loan production increased by 27.7 percent from the second quarter, while the still-dominant retail channel posted a more modest 15.2 percent gain. Many companies have been paring back their retail capacity during 2011 as origination volumes fell sharply through...(Includes four data charts)

Many mortgage lenders are concerned about a new fee-for-service compensation plan proposed by Fannie Mae, Freddie Mac and their federal regulator – including a change in how servicers get their fees. Under the current minimum servicing fee system, servicers take their slice of compensation out of the interest payments being passed through from borrowers to the government-sponsored enterprises. Under the proposed fee-for-service plan, servicers would pass through the entire consumer payment and then get their compensation from the GSEs. Beyond the economics of the proposed change – servicers would get a flat fee, perhaps...

In today’s dramatically changed mortgage lending and regulatory environment, lenders must aggressively manage their originator compensation structures if they want to guarantee their compliance with all applicable laws and regulations, according to a top industry consultant. The first step is “to eliminate all incentive arrangements that pay commissions or bonuses based on any of the terms or conditions of the loans such as interest rates, demand features, prepayment penalties or proxies for these loan terms,” said Henry Oehmann, national executive compensation services executive director for Grant Thornton. Lenders...

Any proposed restrictions on asset-backed securities issuers, real estate investment trusts and other mortgage-related pools under the Investment Company Act would be harmful to the market and further restrict liquidity and capital formation, warned stakeholders. In comments to the Securities and Exchange Commission’s possible amendments to Rule 3a-7 and Section 3(c)(5) of the ICA, most stakeholders noted that the two provisions have worked well through the years to distinguish asset-backed issuers from investment companies, address investor protection concerns and allow the growth and innovation of...