The Consumer Financial Protection Bureau boosted Fannie Mae and Freddie Mac business by some $132.9 billion when it gave the two government-sponsored enterprises a free pass on the debt-to-income ratio requirements of the qualified-mortgage rule. For the non-agency world, a qualified mortgage has to have a DTI ratio of 43 percent or less. While the government-insured market has its own QM rules that effectively ignore DTI, a loan eligible for sale to the GSEs is considered a qualified mortgage if it meets all the QM criteria – such as no interest-only payments – other than the DTI cap. From the beginning of 2014 through the end of the first quarter of this year, about 16.3 percent of the loans securitized by Fannie and Freddie had...[Includes two data tables]
The sale of RoundPoint Mortgage Servicing has fallen apart with the bidder walking away from the table, according to industry advisors close to the transaction. Sources indicate that Tavistock Group, the owner of the nation’s 24th largest servicer, still has an interest in finding a buyer for the servicer/lender, but for now no deal is imminent. Tavistock bills itself as an international private-equity firm with a strong interest in finance, real estate and other sectors. The firm is headquartered in the Bahamas. An advisor close to the transaction declined...
Basel III capital requirements for mortgage servicing assets started to take effect in the first quarter of 2015, with full implementation slated for 2018. Smaller banks were impacted by new servicing capital rules much more so than larger banks in the first quarter, according to industry analysts. Previously, a bank’s servicing could contribute up to 50 percent of a bank’s total capital. Under the new Basel framework, mortgage servicing assets are limited to 10 percent of a bank’s common equity Tier 1 capital. MSA in excess of the 10 percent threshold must be deducted from common equity. “Despite the fact that changes to servicing capitalization have been telegraphed to the market as early as 2010, a disproportionate number of small banks appear...
The Office of the Comptroller of the Currency announced last week that six banks subject to servicing-related consent orders established in 2011 will face new restrictions because the banks haven’t met all of the requirements in those orders. The restrictions were particularly harsh for Wells Fargo, the industry’s largest servicer. Wells handled $1.72 trillion in servicing as of the end of the first quarter of 2015, accounting for 17.5 percent of the servicing market, according to Inside Mortgage Finance. Until the consent order is terminated by the OCC, Wells will be prevented...
Sometimes lost in the hoopla over the rising nonbank share of mortgage servicing is that banks have fallen in and out of love with the servicing market for decades.
“We are extremely concerned that, one year after the CFPB’s mortgage servicing rules went into effect, we are still finding runarounds and illegal dual-tracking,” said agency Director Richard Cordray.
A relatively small – even microscopic – percentage of loans securitized by Fannie Mae and Freddie Mac in the past three years have been subject to a repurchase demand, according to a new Inside Mortgage Trends analysis.
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