The Department of Veterans Affairs has issued an interim final rule establishing that almost all VA loans that meet current agency underwriting standards will be “safe harbor” qualified mortgages. Certain VA streamlined refinancing will be “rebuttable presumption” QMs instead. Specifically, under the VA rule, safe harbor QMs include all purchase-money mortgage loans and refinances other than certain Interest Rate Reduction Refinance Loans (IRRRLs) guaranteed by the VA. Such a designation would help assure veterans they can still obtain mortgage loans on favorable terms while easing lenders’ fear of liability if they originate VA loans as well as investors’ concern about putting their money in VA loans, the agency said. In addition, the interim final rule confers QM safe harbor status to all VA direct loans, Native American direct loans and vendee loans. The VA QM rule complies with ...

The Department of Housing and Urban Development will soon seek comment on a proposal to extend equal protection to reverse mortgage borrowers and their non-borrowing spouses from displacement due to eviction or foreclosure. The proposed rule would codify the changes to existing Home Equity Conversion Mortgage regulations and make other alternative revisions as appropriate, according to HUD. The FHA expects to publish a notice of proposed rulemaking soon. Currently, the National Housing Act provides for a “safeguard to prevent displacement of the homeowner.” The provision defers repayment of the HECM until the homeowner’s death, the sale of the home, or the occurrence of other events specified in the regulations. Such events include the homeowner’s failure to reside in the property or failure to pay the required taxes and insurance. Without this provision, a reverse mortgage is ...

The House Appropriations Committee this week approved the FY 2015 Transportation, Housing and Urban Development funding bill, which, among other, things contains a provision prohibiting federal housing agencies from facilitating the use of eminent domain in resolving foreclosure problems. Specifically, the FHA, Ginnie Mae and the Department of Housing and Urban Development would not be allowed to use funds appropriated by Congress to “insure, securitize or establish a federal guarantee” of any mortgage or mortgage-backed security that refinances or replaces a mortgage that has been subject to eminent domain condemnation or seizure by a state, municipality or any other political subdivision of a state. In addition, the bill would prohibit the use of appropriated funds or any receipts or amounts collected under any FHA program to implement the FHA’s new Homeowners Armed with Knowledge (HAWK) program. HUD has proposed to ...

The Senate Banking, Housing and Urban Affairs Committee is expected to vote on the housing finance reform legislation next week, but there’s a growing consensus among industry observers that no amount of last-minute patchwork compromises will make the bill ready for a prime-time Senate vote. Many observers said last week’s abrupt announcement by Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, to delay consideration of S. 1217 in order to gain more than the minimum 12 votes needed to clear the committee doomed the chances of getting the bill to the floor for a vote. A banking committee staffer told...

There’s a growing concern among participants in the secondary market that legislation in the Senate to reform the government-sponsored enterprises won’t be able to allow the to-be-announced market to function. The latest anxieties were raised by officials at Fannie Mae and Freddie Mac, whose securities flourish in the TBA market. Legislation in the Senate from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, calls for the preservation of the TBA market but doesn’t provide any roadmap for how the proposed Federal Mortgage Insurance Corp. should accomplish that feat. “Unless the FMIC sets...

The housing finance reform legislation authored by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, will result in higher guaranty fees and less cross-subsidization than the current Fannie Mae and Freddie Mac fee structure, according to the government-sponsored enterprises. The Johnson-Crapo bill, which was abruptly pulled from a scheduled markup before the Senate Banking, Housing and Urban Affairs Committee this week, would establish a new type of MBS with an explicit government backstop that requires private capital to absorb the first 10 percent of losses. “There is...

Concerns about the functionality of the to-be-announced market and potential incentives for riskier lending have prompted some to suggest that legislation under consideration in the Senate to reform the government-sponsored enterprises should remove the capital markets option for risk sharing and rely solely on a guarantor model. A number of agency MBS participants aren’t too pleased with the suggestions and have countered that a capital markets option is necessary in the country’s housing finance system. Under the capital markets option envisioned in the GSE reform bill from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, investors would hold...

The status of housing finance reform legislation has become a topic of open speculation after the leadership of the Senate Banking, Housing and Urban Affairs Committee announced a last-minute postponement of a markup this week following the submission of some 100 amendments and the continued non-commitment of support by some committee Democrats. Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, announced to a packed committee chamber earlier this week that they would delay consideration of S. 1217 in order to “build a larger coalition of support” for their reform measure. “While we have the votes to report the bill out today, members of the committee have asked...

Fannie Mae, Freddie Mac and their conservator/regulator, the Federal Housing Finance Agency, have provided significant comments and recommendations regarding the role of private mortgage insurers under a new housing-finance system. The GSEs and the FHFA submitted their views on private mortgage insurers as part of broader commentaries provided to the Treasury Department on the Senate bipartisan reform bill drafted by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID. The bill would wind down the two government-sponsored enterprises and replace them with a new securitization structure requiring that private capital absorb the first 10 percent of losses on a new breed of conventional mortgage-backed securities. To be eligible for the new MBS program, mortgages with loan-to-value ratios exceeding 80 percent would have...

Passage of legislation from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, to reform the government-sponsored enterprises would prompt some changes to the multifamily MBS market, according to industry analysts. While the bill’s impact on the multifamily market is expected to be modest overall, according to Moody’s Investors Service, the pricing advantages seen on multifamily MBS from Fannie Mae and Freddie Mac compared with non-agency commercial MBS would likely disappear. The Johnson-Crapo bill, which is scheduled for a markup next week by the Senate Committee on Banking, Housing, and Urban Affairs, calls for risk-sharing structures in the multifamily market already used by Fannie Mae and Freddie Mac for multifamily MBS, potentially limiting any broad disruptive impact to the multifamily market from the bill. Within one year after the bill becomes law, Fannie and Freddie would be required...