The Department of Veterans Affairs expects to have a finalized Qualified Mortgage (QM) rule by May to help clear up some issues that have arisen since the agency issued an interim final rule last spring. The VA issued the interim QM rule for comment on May 9, 2014, to define which VA loans will have QM status under the ability-to-repay (ATR) rule. Issued by the Consumer Financial Protection Bureau, the ATR rule provided temporary QM status to loans eligible for FHA insurance and guaranties by the VA and the Department of Agriculture’s Rural Housing Service. Eligible government-backed loans must be 30-year fixed-rate with no interest-only, negative amortization or balloon features. Total points and fees must not exceed 3 percent of the total loan amount for loans of $100,000 or more. Loans that meet the definition of a temporary VA-eligible QM are considered as in compliance with the ATR rule. They are designated as “safe harbor QMs,” provided they are not ...

Were Bank of America, Citi and Chase manipulated into making donations to Democrat-leaning housing advocacy groups as part of their recent mortgage settlements with the Department of Justice? That seemed to be the implicit question underlying the grilling of a key Justice Department official by Republican members of a House Judiciary subcommittee during a hearing this week that focused on the donations the three mega-banks were directed to make to housing counseling groups as part of their $36.6 billion settlement with the DOJ. “The concern is...

Federal Housing Finance Agency Director Mel Watt has repeatedly said that GSE reform should be left to Congress. However, industry analysts suggest that the FHFA’s actions under Watt are helping to build a foundation for legislation. Michael Stegman, counselor to the Treasury Department for housing finance policy, said the FHFA’s actions are helping to create bipartisan consensus for provisions to be included in GSE reform. He pointed to the common securitization platform, risk-sharing transactions and capital standards for private mortgage insurers. Stegman said the FHFA’s actions are just a starter, particularly because Watt’s actions could be reversed by the next director of the FHFA. The Treasury official was among the speakers who addressed the current state of the GSEs at ...

Internal differences among Democrats and Republicans – let alone the strong differences between the two parties – have prevented Congress from resolving the conservatorship of the two government-sponsored enterprises, according to industry analysts. At the ABS Vegas conference this week sponsored by the Structured Finance Industry Group and Information Management Network, two people with intimate knowledge of matters in the House and Senate pointed to inter-party issues regarding GSE reform. Andrew Olmem, a partner at the law firm of Venable and a former Republican chief counsel and deputy staff director at the Senate Committee on Banking, Housing, and Urban Affairs until 2013, noted...

Lawmakers and regulators alike cited the recent move by the Consumer Financial Protection Bureau to liberalize its ability-to-repay rule somewhat as an example of the kind of adjustments that can be made to help ease the regulatory burden for smaller financial institutions, especially those operating in underserved markets. “A few weeks ago, the CFPB announced changes to its mortgage rules – a win for small lenders, particularly those in underserved rural areas,” said Sen. Sherrod Brown, D-OH, ranking member of the Senate Banking, Housing and Urban Affairs Committee, during a hearing early this week. “There is...

Rep. Bill Huizenga, R-MI, chairman of the House Financial Services Subcommittee on Monetary Policy and Trade, recently re-introduced the Mortgage Choice Act, the points-and-fees legislation, with some bipartisan support, which could help ease concern at a White House wary of Republican efforts to scale back the powers of the CFPB. The measure would exempt from the qualified mortgage 3 percent cap on points and fees any affiliated title charges and escrow charges for taxes and insurance. Huizenga’s bill also would exclude lender-paid compensation to a bank in a wholesale transaction from the 3 percent cap.“Hardworking families across the nation should not be denied access to a qualified mortgage because of technicalities that are largely out of their control,” said ...

Policymakers continue to provide plenty of doubt about whether anything will happen to shrink the footprint of the government-sponsored enterprises. At a hearing last week before the House Financial Services Committee, Mel Watt, director of the Federal Housing Finance Agency, said he hasn’t made a decision about future adjustments to the guaranty fees charged by Fannie Mae and Freddie Mac. The g-fee issue has been under review by the FHFA for ...

Federal housing regulators once again sought authority from Congress to impose an administrative fee on lenders to support information technology improvements and administrative functions at the FHA – a bid Congress rejected last year. As part of President Obama’s FY 2016 budget, the Department of Housing and Urban Development is proposing to charge lenders up to $30 million in fees to cover FHA salaries and expenses and information technology upgrades. The IT component will focus on strengthening FHA’s risk-management efforts through expanded quality-control reviews, enhanced tools and other risk-management initiatives. Separately, the president requests an appropriation of $174 million in administrative costs to enable the FHA to implement a risk management and program-support process – both critical for FHA’s oversight of ...

The Department of Housing and Urban Development is once again asking for authority to charge lenders an administrative support fee to fund information technology upgrades and administrative functions at the FHA, a bid that was shot down by Congress last year. As part of the Obama administration’s fiscal 2016 budget proposal, HUD wants to charge lenders up to $30 million in fees, which would be credited as offsetting collections to the FHA’s Mutual Mortgage Insurance program account. The mortgage industry cautioned...

Members of Congress on both sides of the aisle continue to work on legislation to reform the GSEs but with strong differences between the parties, there remains little optimism that GSE reform legislation will be enacted in the next two years. “While I realize the odds are long and the political issues to overcome are immense, I do believe that reforming this broken marketplace must remain a priority of this committee,” said Rep. Scott Garrett, R-NJ, at a hearing this week by the House Financial Services Committee. Garrett chairs the subcommittee on capital markets and GSEs. Garrett said previous GSE reform bills introduced on both sides of the aisle in Congress in recent years provide a foundation for what he ...