Legislative reform of the government-sponsored enterprises doesn’t appear to be a high priority for Republican lawmakers, but President-elect Donald Trump’s plans to reduce the corporate tax rate could inadvertently prompt some GSE reform activity, according to industry analysts. As of the end of the third quarter of 2016, Fannie Mae and Freddie Mac had a combined $53.80 billion in deferred tax assets. The DTAs result from differences between the carrying amounts of existing assets and liabilities under generally accepted accounting principles and their respective tax bases. The DTAs are...

The American Bankers Association sent a letter to the leaders of Congress recently, urging adoption of a bipartisan regulatory relief package that would provide unspecified reform of the CFPB and address an expanded definition of a qualified mortgage. When it comes to the bureau, the ABA urged sensible regulation by restoring “balance to the regulatory process, including Consumer Financial Protection Bureau reform,” and by focusing on promoting both economic growth and safety and soundness. On the QM point, the organization asked lawmakers to “reform mortgage regulations that have raised costs and prevented banks from flexibly serving their customers without enhancing consumer protections or safety and soundness. Most crucially, deeming loans held in portfolio as qualified mortgages will expand safe and ...

Change in the political balance in Washington that put the GOP in control of both houses of Congress and the executive branch has fueled speculation that something will finally be done to resolve the conservatorships of Fannie Mae and Freddie Mac. As in the past, there is no shortage of competing proposals. At an Urban Institute seminar this week, Rick Lazio, former Republican congressman from New York, said...

Capital requirements regarding bank holdings of non-agency MBS increased significantly after federal regulators implemented Basel III reforms in 2014. And while banks have largely been reluctant to re-enter the market for non-agency MBS issuance, a recent report by the Government Accountability Office suggests that the impact of bank involvement in the non-agency MBS market is unclear. The GAO was asked to explain how capital requirements for a mortgage depend on how the loan is financed and how the requirements have changed since the financial crisis. The report was requested by Sen. Richard Shelby, R-AL, who until recently was the chairman of the Senate Committee on Banking, Housing and Urban Affairs. The GAO noted...

With financial markets awaiting, with some uncertainty, the public policy positions of the incoming Trump administration and the new Congress, industry analysts say ABS investors can expect most sectors to turn in stable performances in 2017. “As we look back on 2016 and consider the 2017 global structured finance outlook, most markets and their credit conditions seem favorable, and in some cases, even ideal. However, 2017 has many unknowns, especially the specific policies and priorities that will be adopted by the new U.S. administration,” said analysts with S&P Global Ratings in a recent outlook report. “Some would suggest government-sponsored enterprise privatization is possible, risk retention could be revised, and an appropriate/globally consistent capital treatment for structured finance products could be approved.” Further, “For the most part, we expect...

Mortgage compliance experts say there’s still a strong need for the Consumer Financial Protection Bureau to provide more guidance about acceptable business relations under Section 8 of the Real Estate Settlement Procedures Act. One of the issues that came to the fore in the bureau’s enforcement action against PHH Mortgage was lenders’ relationships under marketing services agreements. Even though banks these days may be using MSAs to a lesser extent than nonbanks, there is still a need for the CFPB to more clearly delineate do’s and don’ts. “On the lender side of the mortgage industry, there is...

With the formal transition of presidential power now a mere week away, Congressional Republicans and Democrats alike were busy this week reordering the teams that will take the field for the 115th Congress. Mortgage lenders are hopeful for at least some degree of regulatory relief from the Republican-controlled Congress and White House, but Democrats are vowing to defend the Dodd-Frank Act, one of the signature achievements of the outgoing Obama administration. Republicans in the House of Representatives got...

Regulators are working to get a better understanding about the ownership of mortgages, particularly for the span between origination and final funding, according to the Office of Financial Research. “Regulators now collect origination data and loan performance data about much of the home mortgage market,” the OFR said in its recently published 2016 financial stability report. “However, they do not collect data about ownership of a mortgage between origination and final funding. Information on this short phase in the life of a loan is needed for a full picture of risks.” The OFR, an office of the Treasury Department that was established by the Dodd-Frank Act, noted...

As 2016 drew to a close, various industry officials were busy making the case for legislation that would alter the structure of the CFPB and clip its wings as part of a strategy to scale back the Dodd-Frank Act and provide lenders with significant regulatory relief. Industry officials are confident they will encounter a more sympathetic White House with Donald Trump as the occupant. Analysts with Compass Point Research & Trading believe a number of important issues will be addressed as part of the final legislative regulatory relief package, including governance changes shifting the CFPB, as well as the Federal Housing Finance Agency and the Office of the Comptroller of the Currency, into commission structures. They also expect to see ...

A handful of industry groups representing banks and credit unions wrote to Senate leaders recently, making the case for switching the leadership structure of the CFPB from a single director to a multi-member commission, which was how the bureau was initially envisioned by early advocates such as Elizabeth Warren, then an adviser to President Obama. In a letter to Senate Majority Leader Mitch McConnell, R-KY, and Minority Leader-elect Chuck Schumer, D-NY, the Consumer Bankers Association, the Credit Union National Association, the Independent Community Bankers of America, and the National Association of Federal Credit Unions urged lawmakers to pass legislation to create a five-person, bipartisan board to govern the bureau. “The CFPB is an independent regulatory agency that provides the sole ...