The Department of Housing and Urban Development released its long-awaited “disparate impact” final rule last week, formalizing for the first time the long-held interpretation of the Fair Housing Act by HUD, which has repeatedly asserted that housing policies and practices can be determined to be discriminatory not simply through their intent, but also by their effect. “As we’ve learned over the years, housing discrimination comes in many forms. Discrimination doesn’t have to be intentional in order to have a damaging...

The CFPB’s legal position on a borrower’s right of rescission under the Truth In Lending Act again swayed the day for a consumer. This time, it was the Third Circuit Court of Appeals, in Sherzer v. Homestar Mortgage Services, that agreed with the bureau’s legal argument that a lawsuit filed more than three years after a mortgage has been closed can be brought, so long as the borrower sent the lender a written notice of rescission within the three-year period.In this instance, borrowers Daniel and Geraldine Sherzer obtained...

Many in the mortgage finance industry were unsettled with the recent Canning v. National Labor Relations Board ruling, fearing compliance chaos could ensue right as the industry is about to be confronted with implementing a handful of critical new regulations that will transform the landscape of mortgage lending for decades to come, such as the new ability-to-repay final rule. However, some top industry compliance attorneys urged the industry to press on full-speed ahead with their compliance efforts, regardless of the uncertainty...

CFPB Director Richard Cordray told an assemblage of financial industry representatives last week that it would be a mistake for prudential regulators to examine institutions in such a way as to steer them toward providing only mortgages that can be defined as “qualified” under the bureau’s ability-to-repay rule, according to one industry source in attendance. Cordray said the CFPB wants other types of mortgages to flourish as well, the source continued. Bureau staff added that they would expect the percentage of QMs in the...

The ranks of non-agency mortgage-backed security issuers are set to expand beyond Redwood Trust and Credit Suisse, but industry analysts note that issuance remains constrained due to bank portfolio execution and the government-sponsored enterprises. At the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, Laurie Goodman, a senior managing director at Amherst Securities Group, predicted $25 billion to $30 billion in new non-agency MBS will be issued this year, the most ...

Two real estate investment trusts are working toward joining Redwood Trust in issuing new non-agency jumbo mortgage-backed securities. Two Harbors Investment and PennyMac Mortgage Investment Trust are acquiring jumbos with plans to securitize the loans and potentially hold the subordinate tranche, a model similar to Redwood’s efforts. Two Harbors first announced its intentions to issue new non-agency MBS in 2011, with a goal for issuance at the end of that year. Thomas Siering, president and CEO ...

Issuers, investors and even regulators agree that underwriting standards for non-agency mortgage-backed securities will have to loosen for the sector to grow. “We have to start moving down the credit spectrum,” said Sharif Mahdavian, a director and analytical manager of residential MBS at Standard & Poor’s. Speaking at the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, he said non-agency originations could easily move from “shocking prime” to ...

The owners of Citadel Servicing are moving closer to raising capital in the range of $100 million to $200 million, but as Inside Nonconforming Markets went to press this week, they weren’t taking telephone calls about the transaction. The privately held Citadel is based in Orange County, CA. Its CEO is Dan Perl, a former thrift executive who has worked in nonprime but exited the business before the market crashed. Although Perl has declined interviews, at least two sources close to the company ...

A deeply divided House Financial Services Committee took on FHA solvency this week as critics and defenders clashed over the agency’s practices, financial health and future role in the nation’s housing market. The distinctly partisan tone of the hearing quickly raised doubt as to whether the Republican majority and their Democratic opponents can come to some compromise to strengthen the FHA and reduce its risk to taxpayers. Committee Chairman Jeb Hensarling, R-TX, echoed complaints by Republican colleagues that the FHA is ...

An announced 10 basis-point hike in the FHA mortgage insurance premium (MIP) may bolster the health of the FHA Mutual Mortgage Insurance Fund and speed up shrinkage of FHA market share, but it will also make FHA-insured loans costlier for borrowers. The increase is the latest in a series of premium hikes imposed by the Department of Housing and Urban Development in the past three years to strengthen the MMI Fund’s capital reserves, which lately have fallen to a negative position. Simultaneously, HUD announced other measures to ... [1 chart]