This week, 127 mortgage banking executives attached their names to an open letter to members of Congress, urging federally elected politicians not to cede the work of housing-finance reform to the White House and the institutions it controls.The correspondence asks lawmakers to back draft legislation that creates a new “guarantor-based” system that builds on the current infrastructure created and maintained by Fannie Mae and Freddie Mac.The executives, members of the Mortgage Bankers Association, favor improving the system by having “two or more” guarantors. The group believes a guarantor-based system – as opposed to an “issuer-based” system – is the best way to meet the nation’s housing-finance needs.

The draft of the housing-finance reform proposal from Sen. Bob Corker, R-TN, appears to have morphed out of both the Mortgage Bankers Association plan and a proposal put forth by Michael Bright and Ed DeMarco. A recent analysis by the Structured Finance Industry Group compared the Senate discussion draft with the other two proposals. SFIG noted that all three proposals advocate an explicit mortgage-backed securities guarantee, preserving the to-be-announced market and the 30-year fixed-rate mortgage. But when it comes to the cash window, the Senate draft deviates from the MBA and Bright/DeMarco plans, which suggested maintaining the cash window operations through the GSEs. Corker’s draft would maintain the cash window through the guarantors

Small lenders and affordable housing groups are not fans of the draft of housing-finance reform from Sen. Bob Corker, R-TN. Corker’s plan calls for having five or more guarantors to promote competition in the marketplace, but some worry about the big banks becoming the primary benefactors of this plan.With several private companies purchasing and securitizing mortgages, advocates of the 80-page draft said it would help end the duopoly of Fannie Mae and Freddie Mac. The proposal includes winding down the GSEs to establish the new guarantors of which none would be able to control more than 20 to 25 percent of the market.

Rep. Jeb Hensarling, R-TX, sounded off on what may happen if Congress doesn’t act on housing- finance reform this year and implied that it doesn’t look good for affordable housing efforts. During a House Financial Services Committee hearing last week, the committee chair fired off a series of questions to Treasury Secretary Steve Mnuchin asking for confirmation on the Federal Housing Finance Agency’s powers. With FHFA Director Mel Watt’s term expiring in January 2019, Hensarling’s concern was that the Trump administration will name a replacement that could do away with some of the GSEs’ affordable housing initiatives.

With the legislative calendar growing shorter and Democrats avoiding saying anything positive about the GOP draft legislation on housing-finance reform, many in the industry are worrying more about what might happen to Fannie Mae and Freddie Mac when Mel Watt leaves his post as director of the Federal Housing Finance Agency.

The House of Representatives this week approved bills extending regulatory relief pertaining to the integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act, or TRID.

A surge in anti-churning efforts by legislators and regulators to address the churning of VA loans has prompted analysts to examine certain policy changes, potential cures and pending legislation designed to protect veterans from predatory serial refinancing schemes. For instance, bipartisan legislation introduced by Sens. Elizabeth Warren, D-MA, and Thom Tillis, R-NC, would establish a minimum 50 basis point incentive for qualified VA refi mortgages, recoupment of refi costs within three years, and a six-month seasoning period before the initial loan could be refinanced into a new VA loan. However, Wells Fargo Securities analysts are concerned that S 2304, Protecting Veterans from Predatory Lending Act of 2018, does not distinguish between rate-term refinancing and cash-out refinancing and may wind up eliminating cash-out refi as an option for cash-strapped veterans. Although some lenders used ...

The U.S. Court of Appeals for the District of Columbia Circuit recently upheld a lower court dismissal of a False Claims Act lawsuit alleging a lender’s violation of the 2012 National Mortgage Settlement and of the Home Affordable Modification Program. In Laurence Schneider, Appellant, v. JP Morgan Chase Bank, N.A., et al., Appellees, the federal government declined to intervene, allowing the qui tam lawsuit to proceed. Schneider, the relator and an owner of a mortgage servicing company that purchased numerous loans from Chase, alleged that the lender falsely claimed compliance with the $25 billion landmark settlement negotiated in 2012 between the federal government, 40 state attorneys general, and a group of large banks, including Chase. The settlement resolved claims against the banks for allegedly improper origination and servicing of conventional, FHA and VA loans that were thought to ...

The GOP housing-finance reform bill being developed in the Senate would keep the current standards for loan limits that apply to the government-sponsored enterprises, according to a draft of the bill released last week. Boosters of the non-agency mortgage market have long called for lower GSE loan limits, but Congress hasn’t shown an appetite to reduce them. The bill was drafted by Sen. Bob Corker, R-TN, and many Democrats have withheld support to this point, including ...

A bill introduced in the Senate last week with some bipartisan support would allow real estate investment trusts to regain access to funding from Federal Home Loan Banks. The bill would overturn a 2016 rule from the Federal Housing Finance Agency that restricted captive insurance companies from being FHLBank members. Before the FHFA rule took effect, a number of REITs established captive insurers to gain access to FHLBank advances, which come with better terms than ...