Mortgage lenders’ efforts at compliance with post-financial crisis regulation, largely from the CFPB, shifted their focus from fully implementing e-mortgage processes but also helped them develop the necessary technology to move forward with them in the future, according to a new report from analysts at Moody’s Investors Service. “Following the crisis, lenders focused on adapting technology to implement regulations such as the ability-to-repay [qualified mortgage] rule and the TILA-RESPA Integrated Disclosure rule rather than on e-mortgages,” the analysts said. “The implementation of those regulations has, however, led to advancements in the technology needed to originate e-mortgages by providing, for example, a seamless data feed between the mortgage loan application and the disclosure documents.” Further, “Some lenders and servicers have also ...

Nationstar in the CFPB’s Crosshairs Over HMDA Reporting. Nationstar, the residential mortgage servicer, revealed recently it is being investigated by the CFPB over issues related to complying with the Home Mortgage Disclosure Act.... Non-Agency MBS Issuers Like the Legal Protection of the ATR. Congressional Republicans may be working on legislation to repeal and replace many regulations required by the Dodd-Frank Act, but some issuers of mortgage-backed securities are actually pushing to maintain some of the regulations.... Trump Executive Order on Regulatory Red Tape Unlikely to Apply to CFPB. Will the Bureau Comply Anyway? The executive order that President Trump signed in the middle of February that requires every federal agency to establish a regulatory reform task force to eliminate red tape probably does not apply to the CFPB, according to industry experts....

The deal-agent role that some investors are pushing for in new non-agency MBS will complete or oversee many of the tasks that are already present in transactions with one important caveat: the deal agent has a responsibility to protect investors. A deal agent will oversee various participants in an MBS, oversee enforcement of representations and warranties, and have a fiduciary duty to investors. Yehudah Forster, a vice president and senior credit officer at Moody’s Investors Service, said...

A transparency feature included in the Dodd-Frank Act aimed at helping MBS and ABS investors understand the representations and warranties on a transaction has created a significant amount of work for rating services with little benefit for investors, according to officials at ratings firms. Since June 2015, rating services have been required by the DFA to compare the reps and warrants on a transaction they’re rating with a benchmark set of reps and warrants for that asset class. These 17g-7 reports often span hundreds of pages, detailing similarities and differences between the reps and warrants on a specific transaction compared with a set of benchmarks established by the rating services. Claire Mezzanotte, a group managing director and head of global structured finance at DBRS, said...

MBS are likely to be hurt when the Federal Reserve stops its reinvestments to shrink its balance sheet over the next few years, according to an analysis by Desjardins, Canada’s largest cooperative financial group. Even though the agency plans to withdraw gradually, its $1.75 trillion in MBS holdings account for approximately 20 percent of all U.S. MBS outstanding, noted Mathieu D’Anjou, senior economist with the Desjardins Group. “An increase in rate spreads between MBS and U.S. bonds, [which is] currently low, could be required...

Online consumer lender Prosper Marketplace, based in San Francisco, recently finalized a deal with a consortium of institutional investors to purchase as much as $5 billion of the lending platform’s unsecured consumer loans during the next two years. The consortium comprises investment bank Jefferies Group LLC and three asset managers: affiliates of New Residential Investment Corp., Third Point LLC, and an unnamed entity of which Soros Fund Management LLC serves as principal investment manager. Under the terms of the deal, the consortium will earn...

A common theme among housing finance reform proposals is to infuse more private capital into the system while not disrupting the market. Beyond that, the plans take significantly different approaches about what to do with Fannie Mae and Freddie Mac. Jim Parrott, senior fellow at the Urban Institute and the co-author of one of those proposals, released a paper this week comparing his plan with the revised proposal from the Mortgage Bankers Association and a blueprint described by the Milken Institute. The MBA proposed...

The jumbo mortgage market generally kept pace with the robust growth in first-lien originations last year, but the agency component clearly did better than the non-agency side, according to a newInside Mortgage Finance ranking and analysis. An estimated $534.57 billion of single-family mortgages with loan balances exceeding $417,000 were produced last year, an increase of 20.0 percent from 2015. That was in line with the 19.0 percent growth in total first-lien production in 2016. But the agency jumbo market – loans in high-cost markets eligible for securitization by Fannie Mae, Freddie Mac and Ginnie Mae – was...[Includes three data tables]

Ginnie Mae production fell substantially in February from January as the government-insured lending market continued to lose steam in the first quarter of 2017. Ginnie mortgage-backed securities issuance fell 24.0 percent from January as fewer purchase and refinance loans were pooled for securitization, bringing February’s total issuance to just $32.2 billion. Year-over-year Ginnie MBS issuance, on the other hand, increased by 6.2 percent. The government-insured market set an all-time record of $545.0 billion in originations during 2016, a whopping 31.0 percent jump from the previous year. That total eclipsed previous records for originations of FHA, VA and rural housing loans guaranteed by the U.S. Department of Agriculture, according to data compiled by affiliate Inside Mortgage Finance. In addition, government-insured lending accounted for a record ... [ 3 charts ]

The SFIG Vegas conference this week set another attendance record for the annual event, demonstrating strong interest in the structured finance market. While investors are comfortable with most asset classes of MBS and ABS, significant concerns remain about non-agency MBS. More than 6,700 people registered for the conference, according to Jade Friedensohn, director of programming at Information Management Network, which produced the conference along with the Structured Finance Industry Group. Potential investors in non-agency MBS continued...