Trade groups representing smaller mortgage lenders are asking the Trump administration for targeted regulatory relief for smaller independent mortgage bankers. In a joint letter to Treasury Secretary Steven Mnuchin this week, the Community Home Lenders Association and the Community Mortgage Lenders of America urged the administration to back legislation that would exempt independent mortgage lenders from the Consumer Financial Protection Bureau’s supervision, enforcement and third-party vendor audits. Support is also being sought for CFPB administrative action to provide such targeted relief. In June, Treasury issued...

Over the past several weeks, the Treasury Department has been meeting with several industry trade groups about the future of Fannie Mae and Freddie Mac, discussing – among other things – what to do about the impending “zero capital” problem as well as the topic of multiple guarantors. Treasury’s goal, these officials said, is to come up with a workable blueprint on the future of the government-sponsored enterprises and the nation’s housing finance system – changes that might touch Ginnie Mae as well. Late this week there was...

The Milken Institute – a nonpartisan think tank – established a new policy team last week to work on issues involving housing finance reform. Eric Kaplan was named director of Milken’s Housing Finance Program. He was a managing partner at Ranieri Strategies and continues to chair the Structured Finance Industry Group’s RMBS 3.0 effort. Michael Milken and Lewis Ranieri will co-chair a new Housing Advisory Council, which will inform the work of the team led by Kaplan ... [Includes two briefs]

When House Financial Services Committee Chairman Jeb Hensarling, R-TX, first introduced the second version of his Financial CHOICE Act, he acknowledged the comprehensive regulatory relief package might not make it through the Senate in one piece. He said he had a “short game” and a “long game,” suggesting he was open to small, incremental change while still pushing forward with more comprehensive change over the long haul. Last week, the Financial Institutions and Consumer Credit Subcommittee executed a little of that “short game” strategy, holding a hearing to consider a handful of legislative proposals to foster a more efficient federal financial regulatory regime, including two mortgage-related bills. The potentially more significant bill is...

Members of Congress wasted no time getting to work on the CFPB when they returned to the nation’s capital last week after the Labor Day holiday. A subcommittee of the House Financial Services Committee held a hearing to consider a few legislative proposals to foster a more efficient federal financial regulatory regime, including a soon-to-be introduced TRID Improvement Act. Slated to be introduced by Rep. French Hill, R-AR, the TRID Improvement Act of 2017 would amend the Real Estate Settlement Procedures Act and the Truth in Lending Act to expand the period in which a creditor is allowed to cure a good-faith violation on a loan estimate or closing disclosure from 60 to 210 days after consummation. The bill also ...

The Independent Community Bankers of America issued a statement midweek questioning – nine years after the fact – the federal takeover of Fannie Mae and Freddie Mac, saying it was the government’s way of putting the two mortgage giants in a “time out.” ICBA said the move by the Bush administration on Sept. 6, 2008, was made to “help calm the fears of global investors of GSE mortgage-backed securities.” MBS issued by Fannie and Freddie have an “implicit” government guarantee, not an explicit one. However, before and since the takeover, the GSEs have never missed a bond payment to MBS investors. ICBA said, “After being put into conservatorship – an action that has since been proven to be...

The International Monetary Fund proposed that Fannie Mae and Freddie Mac merge into a single enterprise. The IMF discussed ideas that it said could help stabilize the mortgage finance system in a working paper published late last month. The global Washington, DC-based organization said the GSEs should combine forces “as quickly as possible.” And, “Until this happens they should be forbidden to compete for business on the basis of price.” “The GSE regulator should be tasked with monitoring the enterprises to ensure consistency on this basis,” said the author of the paper, Richard Koss. He believes that the housing finance system is unnecessarily complicated, with Fannie and Freddie having selling guides of 1,408 and 2,303 pages, respectively.

GSE Conservatorship Hits Nine Year Mark. It’s been nine years since the government placed Fannie Mae and Freddie Mac in conservatorship on Sept. 6, 2008. No one knew it would last this long. Industry groups, along with some lawmakers, are working hard to put the wheels in motion to come up with a more sustainable solution for the mortgage giants. GSE shareholders group Investors Unite suggested, “If Fannie and Freddie could start retaining their profits and rebuild adequate reserves, the Trump administration could lock in reforms already in place and implement others, creating a federal role in housing finance that protects taxpayers.” GSE Hearing Postponed

Although the National Credit Union Administration and a top CU trade group favor allowing credit unions to buy mortgage servicing rights in the secondary market, don’t look for these “nonprofit” depositories to become significant players anytime soon. At least that’s the opinion of a handful of investment bankers and others who ply their trade in the MSR market. For starters, CUs are not...

The FHA has posted a quick-reference sheet on its website to help lenders navigate the agency’s new Loan Review System. The quick-reference sheet summarizes the most important information in the LRS user manual. The LRS is an electronic platform for single-family, quality-control processes that includes post-endorsement loan reviews, direct endorsement authority test cases, lender-monitoring reviews, and lender-self-reporting of fraud and other material findings. Defect taxonomy, a key LRS component, provides a streamlined method of identifying and capturing information about loan defects uncovered through individual loan reviews. Lenders have four opportunities to respond to FHA reviews. They may access the LRS to view the results of the review in detail but they may not edit or submit responses, upload documents, manage binder requests or create self-reports. When FHA requests a ...