To minimize the risk that their newly minted mortgage loans will fail to comply with the CFPB’s ability-to-pay rules, originators, correspondent lenders and purchasers have begun using independent advisors to perform various quality control functions. Among those functions are ATR/qualified mortgage review, mortgage risk assessment and a mortgage defense package, according to Ron D’Vari, CEO of NewOak, an independent financial services advisory firm in New York City. The ATR/QM review consists of a three-step process (aimed at compliance with ATR/QM requirements) run in conjunction with a credit review or stand-alone, D’Vari said in an online blog post recently. “The first step is diagnostics involving standard due diligence review aimed at identifying deficiencies leading to potential liability for non-compliance with ATR ...

SunTrust Mortgage, based in Richmond, VA, agreed to pay a total of $968 million to settle allegations of origination and servicing wrongdoing under a consent order brought by the CFPB. The Department of Justice, the Department of Housing and Urban Development and state attorneys general from 49 states and the District of Columbia joined in the settlement, which stemmed from the National Mortgage Servicing Settlement. The company will provide $500 million in loss-mitigation relief to underwater borrowers. The order also will require SunTrust to pay $40 million to approximately 48,000 consumers who lost their homes to foreclosure, and $10 million to cover losses it caused to the FHA, the Department of Veterans Affairs, and the Rural Housing Service. The order...

The Financial Stability Oversight Council of the Treasury Department has its eye on the rapidly growing market presence of nonbank servicers such as Ocwen, Nationstar Mortgage and Walter Investment Management.

Others believe thesecases could have a chilling effect on FHA lending to the detriment of first-time homebuyers and borrowers with insufficient cash for a downpayment.

On Fannie Mae and Freddie Mac mortgages with private mortgage insurance, average closing times declined to 42.5 days from 46.0 days.

On the non-QM front, Bayview will go as high as $1.5 million, but the loan-to-value ratio is capped at 80 percent.

Jumbos for borrowers with strong credit profiles present banks with limited risks – particularly adjustable-rate mortgages – and the loans offer lucrative opportunities to cross-sell other products.

NY Passes Bill to Reduce Number of FHA Loans that Would Fall Under Subprime. The New York Assembly recently passed legislation that would result in fewer FHA loans being classified as “subprime” under state banking law, according to the law firm Ballard Spahr. Already passed by the Senate, the bill would make permanent prior emergency rules issued by the Department of Financial Services, which raised the subprime threshold 75 basis points for those loans subject to the revised FHA mortgage-insurance premium cancellation policy. Although the emergency rules were set to expire on Dec. 31, 2013, the DFS granted an extension to allow the state legislature additional time to find a permanent solution, said Ballard Spahr attorneys. The bill passed with overwhelming bipartisan support and strong industry backing, and is expected to ...

BNY Mellon will launch a new business later this year that would enable it to purchase, securitize and service reverse mortgages and provide advisory services to lenders that offer such loans. The new business segment, Home Equity Retirement Solutions, is aimed primarily at retirees experiencing significant financial shortfalls. “We view the funds generated by suitable reverse mortgages as an additional fixed-income component of retirement portfolios, an important part of retirement planning that complements other aspects of the plan,” explained Michael Gordon, managing director for BNY Mellon Investment Management. Gordon noted BNY’s long record of accomplishment working with retirees, including managing assets for 401(k) and defined benefit investments. He said reverse mortgages may now be more prudent based on ...

FHA jumbo loan originations fell significantly in the first quarter of 2014 due primarily to higher mortgage insurance premiums and a decrease in the mortgage loan limits, particularly in high-cost areas of the country, according to Inside FHA Lending’s analysis of agency data. FHA lenders reported a meager $2.4 billion in jumbo originations during the first three months of the year, a decrease of 21.2 percent from the previous quarter and down a whopping 55.7 percent from the same period a year ago. Purchase loans accounted for 81.0 percent of new originations while fixed-rate loans comprised 86.8 percent. FHA jumbo loans are those over $417,000 and they comprise a very small slice of the FHA’s overall loan portfolio. Citing FHA data, Brian Chappelle, a mortgage industry consultant, said that of the FHA loans originated in the last 12 months, roughly 11,000 loans were above $500,000, down from ... [ 2 charts]