The government-sponsored enterprises’ risk-sharing transactions more adequately address incentive problems than non-agency mortgage-backed securities, according to a recent report by the Office of Financial Research. The OFR said back-end risk-sharing transactions from Fannie Mae and Freddie Mac “indicate how private housing finance remains crippled.” The OFR is an independent office within the U.S. Treasury Department, focusing on financial stability issues. The GSEs sold ...

Affordable housing advocates are calling for changes to the mortgage interest deduction allowed for federal taxes. Interest on up to $1.0 million in principal is currently deductible. The National Low Income Housing Coalition recently published a report supporting its call for the cap on the mortgage interest deduction to be lowered to loan balances of $500,000 and below. “There is no policy rationale for the federal government to continue to subsidize the portion of mortgages that ...

Servicers and borrowers with subprime adjustable-rate mortgages would benefit from a new type of loan modification, according to research recently published by the Federal Reserve’s division of research and statistics and division of monetary affairs. The researchers suggested that mods triggered when housing price declines exceed a certain percentage may reduce delinquency and foreclosure rates along with reducing servicers’ costs. The results were detailed in a paper titled ...

Risk-retention requirements established by the Dodd-Frank Act for certain non-agency mortgage-backed securities took effect at the end of 2015. Industry analysts suggest that the requirements will have minimal impact on industry participants’ current practices. “Risk-retention rules will not affect overall residential MBS issuance levels because qualified mortgage issuers will be exempt from risk-retention rules, and non-QM issuers already retain risk,” according to analysts at Moody’s Investors Service ...

The omnibus appropriations bill President Obama signed in December included a provision that supporters suggest will help spur reform of the government-sponsored enterprises. The bill prohibits the Treasury Department from selling its senior preferred shares in Fannie Mae and Freddie Mac until at least the start of 2018. “Passage of this provision makes it clear that Congress – which created mortgage giants Fannie Mae and Freddie Mac in the first place – should ... [Includes three briefs]

The SEC recommends that the rating service in question establish and maintain effective internal controls and more…

Now that the Consumer Financial Protection Bureau has issued a “clarifying” letter on TRID errors, all is well, right? Not necessarily...

FHA lenders funded $12.3 billion in new Home Equity Conversion Mortgage loans during the first nine months of 2015, up a hefty 22.2 percent from the same period in the prior year, according to Inside FHA/VA Lending’s analysis of agency data. Likewise, HECM endorsements increased 17.3 percent to $4.5 billion in the third quarter from $3.9 billion in the prior quarter. This was the highest HECM endorsements have been since the second quarter of 2013, when they totaled $4.1 billion. Purchase loans accounted for 85.8 percent of all HECM originations over the nine-month period. The majority of borrowers favored adjustable-rate HECMs over fixed-rate HECMs, which accounted for only 14.8 percent of HECM transactions. In addition, the initial principal amount at loan originations totaled $7.3 billion, up from $4.6 billion midway through 2015. The volume increase is attributable to program changes implemented ... [1 chart]

Borrowers are required to have a credit score of at least 700 and at least three months of reserves...

No mortgage-related misconduct was alleged in the bureau’s latest action, but servicers shouldn’t take much comfort from the omission...