VA Lenders’ Compliance with CFPB’s Ability-to-Repay and Qualified Mortgage Rules. Until the Department of Veterans Affairs’ rule on ATR/QM is in place, all VA lenders must comply with the requirements of the Truth in Lending Act, as established by the Consumer Financial Protection Bureau’s ATR/QM rule, according to a recent agency guideline. VA will continue to guarantee all loans made in compliance with existing VA requirements, regardless of their QM status, the agency clarified. It urged lenders to refer to the CFPB guidance to ensure all their VA loans are ...

Concerns about the potential harmful effects that the Consumer Financial Protection Bureau’s qualified-mortgage standard might have in the manufactured housing sector struck like lighting at a hearing of the House Financial Services Committee this week, with CFPB Director Richard Cordray bristling at a perceived personal attack from a GOP member and demanding he be treated with respect. Storm clouds quickly gathered as Rep. Steve Pearce, R-NM, complained that the bureau’s QM rules and restrictions on high-cost loans would pretty much exclude manufactured housing – and then accused Cordray of deliberately trying to squash lower-income families. “Fifty percent of the homes in New Mexico are...

The Senate was scheduled to vote late this week on legislation that would delay excessive increases in flood-insurance premiums that are set to take effect as a result of the Biggert-Waters Flood Insurance Reform Act of 2012. Earlier this week, the Senate voted 86 to 13 to move forward with debate on the Homeowner Insurance Affordability Act (S. 1926), a bipartisan bill that was introduced in the Senate and in the House of Representatives to fix some of the ill effects of the Biggert-Waters Act. The vote stopped a filibuster seeking more subsidy cuts to the program. Sponsored by Sens. Robert Menendez, D-NJ, and Johnny Iskason, R-GA, the bill would delay...

Three House Democrats have added their own proposal to the growing list of legislative housing finance reforms that, in time, could pave the way for the government to sell off Fannie Mae and Freddie Mac while giving new purpose to the Federal Housing Finance Agency. The reform proposal by Reps. John Delaney (MD), John Carney (DE) and Jim Himes (CT) would establish a system of government reinsurance for eligible mortgage-backed securities. The idea is to leverage the government’s capacity and the market’s ability to price risk, they said.

Fannie Mae and Freddie Mac should revise their seller/servicer guidelines to allow use of credit scores from more than one provider in order to “foster competition,” according to a bipartisan quartet of House Financial Services Committee members. In a letter sent to Federal Housing Finance Agency Director Mel Watt, Reps. Ed Royce, R-CA; Spencer Bachus, R-AL; James Himes, D-CT; and Carolyn Maloney, D-NY, said that the GSEs should not be restricted to relying on credit scores provided solely by the Fair Isaac Corp.

Michael Stegman, counselor to the Treasury Department on housing-finance policy, said this week that legislation to reform the government-sponsored enterprises is a top priority for the Obama administration. However, industry analysts suggest that Congress is unlikely to pass such legislation anytime soon, leaving the Federal Housing Finance Agency as the driver of GSE reform. “Indefinitely continuing a taxpayer-backed duopoly is neither sustainable nor sensible public policy,” Stegman said this week at the ABS Vegas conference sponsored by the Structured Finance Industry Group and Information Management Network. He pushed...

Three House Democrats plan to introduce a new housing-finance reform bill that would leverage the Ginnie Mae mortgage-securitization infrastructure and private mortgage insurers. The reform proposal by Reps. John Delaney (MD), John Carney (AL) and Jim Himes (CT) would establish a system of government reinsurance for eligible mortgage-backed securities. The idea is to leverage the government’s capacity and market’s ability to price risk, they said. Their plan calls...

The absence of a ready secondary market for mortgages that don’t fit into the safe harbor or rebuttable presumption categories of a qualified mortgage under the Consumer Financial Protection Bureau’s ability-to-repay rule is discouraging mortgage lenders of all sizes from originating non-QMs – at least in the initial phase of the rule’s implementation. “A common question we’ve received … is whether we plan to write non-QM loans,” William Emerson, CEO of Quicken Loans, said before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit during a hearing this week on the effect of the CFPB’s new rule. “I can tell you categorically that Quicken Loans, like the overwhelming majority of lenders, will not lend outside the boundaries of QM. “In fact, even if we wanted to, we wouldn’t be able...

A lot of prospective homebuyers may be shut out of the market if their mortgage financing can’t pass muster with the Consumer Financial Protection Bureau’s qualified-mortgage standard, congressional testimony this week suggested. Witnesses from The Peoples Bank Company, of Coldwater, OH, and Quicken Loans said during a House Financial Services Financial Institutions Subcommittee hearing this week that their firms plan to stay away from making mortgages that don’t fit into either the safe harbor or the rebuttable-presumption QM boxes. “There is...

Expect Fannie Mae and Freddie Mac shareholders to continue to clamor for attention and satisfaction this year whether or not the Obama administration and lawmakers confront claims that the government-sponsored enterprises should share their profits with investors, say industry observers. Late last week, Sen. Bob Corker, R-VA, sought to walk back comments he made regarding GSE shareholder rights while speaking at a policy forum in Washington, DC. Corker said that he and other lawmakers drafting an enhanced GSE reform bill in the Senate recognize that shareholder claims “have to be dealt with.” Following news of Corker’s remark, GSE preferred shares posted...