The Department of Housing and Urban Development’s proposed “qualified mortgage” rule attaches certain conditions to QM treatment that may complicate matters for participating lenders, said attorneys with K&L Gates in Washington, DC. On Sept. 30, the Department of Housing and Urban Development published its own proposed QM rule for FHA loans. The CFPB rule takes effect on Jan. 14, 2014, and will apply to FHA loans until HUD issues a final rule. Under the CFPB rule, many FHA loans would not qualify for the rule’s safe harbor because the higher mortgage insurance premiums would make them “higher priced mortgage loans.” Thus, in order to ...

The U.S. Court of Appeals for the First Circuit has affirmed a district court’s dismissal of a putative class action alleging that a lender improperly required FHA borrowers to buy and maintain higher flood insurance coverage than that indicated in their mortgage contracts. According to an analysis by the Washington law firm BuckleySandler, the ruling from an equally divided en banc court allows mortgage lenders to require borrowers to maintain flood insurance equal to the replacement value of their homes. In Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2013 WL 5394192 (1st Cir. Sept. 27, 2013), plaintiff Stanley Kolbe contends ...

Two surviving spouses of deceased reverse mortgage borrowers won their case against the Department of Housing and Urban Development after a U.S. court found HUD in violation of federal law for failing to protect the spouses from foreclosure. The court’s decision marks a turning point for surviving spouses, such as Robert Bennett of Annapolis, MD, and Leila Joseph of Brooklyn, NY, and ensures that they will be protected against eviction and foreclosure, despite the loss of their husband or wife, said Jean Constantine-Davis, a senior attorney with the AARP Foundation Litigation. In March 2011, the AARP and the law firm of Mehri & Skalet of Washington, DC, filed ...

The MGIC Investment Corp. reported its second straight profitable quarter in 2013 and another increase in new insurance written. While the numbers may not yet indicate a trend, it certainly appears that the Milwaukee-based mortgage insurer is slowly but consistently showing improvement in its performance since posting a net loss of $246.9 million for the same quarter a year ago. MGIC reported net income of $12.1 million in the third quarter and $12.4 million in the second quarter, compared with a net loss of ...

MBS issuers and investors endorse many aspects of the revised qualified residential mortgage requirements recently proposed by federal regulators, but there are concerns about requirements for other asset classes included in the new risk-retention proposal. Issuers of non-agency MBS, ABS and commercial MBS backed by collateral that doesn’t meet certain qualifying requirements will have to retain risk on at least 5 percent of the deal, as required by the Dodd-Frank Act. Major industry groups have asked the regulators for more time to weigh the new proposed rule, which set a public comment period that ends Oct. 30. Richard Johns, executive director of the Structured Finance Industry Group, offered...

Communication among investors in non-agency MBS as well as between issuers and investors has been inadequate, according to industry participants. Trustees and others are working to address the issues, both with new jumbo MBS and vintage non-agency MBS. Investors cite problems with data availability, consistency, timing and quality. Paul Burke, head of North American agency and trust sales at Citibank, said the communication system currently used for non-agency MBS leaves something to be desired. Communication regarding potential votes for action on non-agency MBS, due to a perceived breach of representations and warranties, for example, is generally funneled...

Bucking the stampede of mortgage- and housing-industry interests campaigning against a cut in the conforming loan limits for Fannie Mae and Freddie Mac, the American Securitization Forum is urging the Federal Housing Finance Agency to go ahead and shrink the footprint of the two government-sponsored enterprises. The ASF urged the FHFA to use its authority “to at least marginally reduce” GSE loan limits to lessen Fannie’s and Freddie’s “vice grip on the mortgage market finance market” and encourage the return of private capital. “Such marginal reductions in conforming loan limits would appropriately increase...

It’s no secret that Fannie Mae this year has been pushing some of its newly minted seller/servicers to use the cash window as opposed to swap MBS transactions, but the government-sponsored enterprise may be weighing an “either/or” policy. A spokesman for the GSE told Inside MBS & ABS that he has no knowledge of such a stern choice being given to Fannie customers, but he noted that the secondary market giant continues to wonder why so many new seller/servicers have MBS contracts, but do not actively issue. He said...

Fannie Mae said this week it is all set for meeting the 2013 risk-sharing goal set by its conservator for each of the government-sponsored enterprises after announcing back-to-back risk-sharing deals over the last two weeks. Fannie this week priced a $675 million bond offering under its Connecticut Avenue Securities series. The deal is backed by a reference pool of more than 112,000 single-family mortgages with an outstanding unpaid principal balance of $27 billion. The company late last week reported...

Residential mortgage delinquency rates have turned around nicely from their worst levels in the wake of the financial crisis, but mortgage servicer timelines continue to increase, according to recent findings by industry analysts. “The improvement in the broad U.S. economy in general, and the steady decline of the unemployment rate and the strong rebound of the housing market in particular, have significantly reduced the residential mortgage serious-delinquency rate across all credit spectrums,” Deutsche Bank analysts said in a report issued last week. Delinquency rates have declined...