Small and medium-sized mortgage servicers want the Consumer Financial Protection Bureau to allow flexibility to accommodate different business models as the agency drafts new national servicing standards that are expected to increase costs. The CFPB rulemaking process is somewhat unique because the Dodd-Frank Act requires that it take small business interests into account as it develops new regulations. The agency recently convened a panel under the process required by the Small Business Regulatory Enforcement Fairness Act to weigh the impact of new servicing requirements on smaller lenders. “The panel agreed...

The Consumer Financial Protection Bureau has put together a second panel, as per the Small Business Regulatory Enforcement Fairness Act, tasked with giving the bureau input on the mortgage servicing rules proposal that the CFPB is working on under the Dodd-Frank Wall Street Reform and Consumer Protection Act. “The SBREFA requires the CFPB to convene a small business panel before rolling out regulations that the CFPB director expects to have a significant impact on a substantial number of small business entities,” explained Barbara Mishkin, of counsel in the consumer financial services group...

The four major banks reclassified $6.0 billion in home-equity loans to nonperforming status this month due to guidance from federal regulators. While the holdings have been seen as an impediment to loss mitigation efforts, the banks said the accounting change was essentially cosmetic. Bank of America classified $4.36 billion in HELs as nonperforming as of the end of the first quarter of 2012, up from $2.45 billion at the end of 2011. The increase was due to ...

Regulatory scrutiny of lender-placed insurance is increasing, but non-agency servicers claim that they are compliant with existing and impending regulations for such insurance coverage. The Consumer Financial Protection Bureau is focusing on lender-placed insurance, provisions were also included in the recent $25.0 billion servicing settlement, Fannie Mae recently updated its policies and a number of state investigations are underway. “There appear to be a number of very significant problems with ...

Short sales on mortgages included in non-agency mortgage-backed securities have increased sharply in the past year, as a percentage of total distress property dispositions, according to analysts at Deutsche Bank Securities. The loss mitigation technique is seen as beneficial for borrowers, portfolio servicers and non-agency MBS investors, especially compared with foreclosure costs and timelines. “Short sales typically result in faster resolution and significantly higher principal recovery,” the analysts said. Short sales accounted for about ...

The Department of Housing and Urban Development said it would review and update as necessary its requirements for servicers of FHA-insured loans in conjunction with the establishment of new standards by the Consumer Financial Protection Bureau. HUD wants to ensure coordination between the FHA and CFPB standards and that each set of standards provides effective solutions for borrowers, said an FHA spokesman. On April 9, the CFPB previewed some of the mortgage servicing rules, which the agency plans to propose this summer and adopt in January 2013. It is unclear whether ...

A national consumer advocacy group, whose own investigation of FHA credit overlays in 2010 triggered a federal probe of 19 FHA lenders, said it plans further undercover testing to ensure the unfair practices cease. The National Community Reinvestment Coalition said it is still waiting to hear from the Department of Housing and Urban Development about the results of the multiple investigations the group helped launch over a year ago in response to complaints about credit overlays. A HUD spokesman said the investigation is continuing and “nearing completion.” He did not say, however, why it was taking ...

Implementing proposed legislation aimed at improving the safety and soundness of the FHA single-family program would cost taxpayers $11 million over a four-year period if the bill is enacted in late 2012 and the necessary amounts are appropriated each year, according to the Congressional Budget Office. In an analysis of H.R. 4264, the FHA Emergency Fiscal Solvency Act of 2012, the CBO estimated that $9 million would be spent on mandatory actuarial studies on the health of the FHA Mutual Mortgage Insurance Fund and $2 million for other costs over the 2013-2017 period. The legislation would not affect direct spending or revenues and, therefore ...

Combined servicing volume for the top 50 Ginnie Mae MBS servicers jumped to $1.23 billion in the first quarter of 2012 from $1.11 billion during the same period a year ago – an 11.2 percent increase on a year-over-year basis, according to the Inside Mortgage Finance MBS Database. The quarterly change was a modest 1.7 percent increase from $1.21 billion in the fourth quarter of 2011, data showed. Wells Fargo and Bank of America accounted for 53.5 percent of total Ginnie Mae servicing in the first quarter, with $361.1 million and $302.1 million, respectively. Year-over-year, top-ranked Wells Fargo (29.1 percent market share) saw a ... (1 chart)

Fannie Mae and Freddie Mac’s mortgage servicers will soon be required to review and respond to short sale requests within 30 days of an offer on the property and to provide weekly status updates if the offer is still under review after that, under new standards issued this week by the Federal Housing Finance Agency. Under the new guidance, effective June 15, servicers will have to make a final decision within 60 days of receiving an offer on a short sale property. The FHFA said the change is an attempt to hasten the traditionally time-consuming and difficult primary alternative to foreclosure.