A BuckleySandler lawyer reached into Zen lore to make his point. “If a tree falls in the forest and no one hears it, does it make a sound?” he asked. Similarly, “Starting in 2014: If a lender complies with ATR/QM but cannot evidence it, has the lender complied?”
The drop in warehouse commitments mirrored, somewhat, the fall-off in residential originations, which declined almost 19 percent in the third quarter, according to figures compiled by Inside Mortgage Finance.
Wells, Bank of America and JPMorgan Chase accounted for a combined 44.7 percent of the $517.75 billion in bank HELOCs outstanding at the end of the third quarter.
“In our view, the primary risk associated with some lenders being less than fully prepared for QM could be temporary loan production delays,” the consulting firm adds.
During the first half of 2013, only about $2.05 billion of FHA loans exceeded $625,500, or about 1.5 percent of FHA business, according to Inside Mortgage Finance.
Lenders generated an estimated $218 billion in purchase mortgages during the third quarter, the highest three-month volume since the third quarter of 2007.
The end-of-draw period for home-equity lines-of-credit originated 10 years ago isn’t the only concern for banks, according to federal regulators. Fair-lending violations are also a risk in cases where lenders reduced credit limits on HELOCs or suspended the loans due to declines in home prices. Many lenders suspended borrowers’ HELOCs in recent years or reduced credit limits due to significant declines in home prices, according to the Federal Reserve. “The manner in which HELOC accounts ... [Includes one data chart]
Severe decreases in the FHA loan limits in numerous counties across the country have spurred industry demand for the Department of Housing and Urban Development to disclose the methodology and process it used to determine the new loan limits. Although HUD’s announcement of lower FHA loan limits for 2014 had been long expected, mortgage industry participants were caught off guard by the substantial reductions in FHA loan limits caused by the statutory change in how the limits are calculated and by revised median house prices. For 2014, HUD announced that the national ceiling limit for single-family mortgages in high-cost areas would decline to ... [1 chart]
The Department of Housing and Urban Development has released a final rule defining a “qualified mortgage” that is insured by the FHA. The final rule will be effective on Jan. 10, 2014. The HUD rule builds off the QM/Ability-to-Repay rule, which the Consumer Financial Protection Bureau finalized earlier this year. The Dodd-Frank Act requires HUD to propose a QM definition that is aligned with the ability-to-repay criteria set out in the Truth in Lending Act and with the agency’s mission to ...
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