Industry groups recently wrote to ask the CFPB to educate consumers on specific topics such as arbitration and mortgage shopping. The letters were responses to the bureau’s request for information on its financial education programs. The bureau frequently creates and publishes educational content which covers a wide range of financial topics such as borrowing and saving. The bureau also cooperates with community organizations to disseminate ...
Prepayment speeds for VA and FHA loans are expected to converge due to changes in the refinance requirements for VA home loans, according to Wells Fargo Securities analysts.
The Milken Institute said the GSEs’ duty-to-serve policy is more complicated than other affordable housing reform issues because it forces the secondary market to boost lending in the primary market and assumes those private firms are underperforming. The conservative think tank published a paper this week authored by Michael Stegman and Phillip Swagel on the role of duty-to-serve in which it examined the policy and its potential impact on the mortgage market. While DTS currently encompasses manufactured housing, rural housing and affordable housing preservation, Milken said housing finance reform debates have centered on creating a DTS that includes areas beyond those three targets.
There was some discussion as to whether credit scores serve as a good mechanism to achieve cross subsidization as well as a need for better data to manage risks, during an Urban Institute panel discussion last week focused on subsidies and GSE pricing. Credit scores aren’t a good tool to achieve cross-subsidization, according to Andrew Rippert, CEO of Global Mortgage Group at Arch Capital. He said the goal should be to serve low- and moderate-income borrowers, not necessarily to subsidize people who make a lot of money but have bad credit scores and don’t manage their credit. “Our belief is that we can do a lot better if we were very explicit about the risk in the system with regards to FICO scores,” Rippert said.
While the GSEs have been engaging in risk-based pricing for mortgage guarantees since the crisis, very large cross subsidies remain, according to one panelist from the Federal Reserve…
Rick Sharga of Carrington: “Refi volumes will continue to contract, and lenders will have to accelerate their shift towards more purchase business in order to maintain volume.”
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