Two of the 12 Federal Home Loan Banks announced last week they are deep into merger talks that, if consummated, would create the largest single entity within the FHLBank system. The proposed merger of the FHLBank of Des Moines and the smaller, troubled FHLBank of Seattle would create an institution with more than 1,500 member financial institutions in 13 states and three U.S. territories in the Pacific Ocean. “A detailed due diligence process is...

A GSE reform bill filed late this week by a trio of House Democrats is less a last ditch effort to push their measure across the finish line this year than a bid to have the first word in next year’s debate over housing finance reform, note industry observers. The Partnership to Strengthen Homeownership Act, H.R. 5055, by Reps. John Delaney (MD), John Carney (DE), and Jim Himes (CT), follows through on their January draft proposal to seek a “middle ground” between the existing, politically untenable legislative proposals.

Secondary mortgage market participants generally support the Consumer Financial Protection Bureau’s proposed “right to cure” a mortgage that inadvertently breaches the qualified mortgage 3 percent points-and-fees cap – but they want to see it made more assignee-friendly. Earlier this year, the CFPB proposed allowing a limited cure for a points-and-fee violation if the creditor in good faith intended to originate the loan as a QM under the bureau’s ability-to-repay rule and the loan otherwise meets the requirements of a QM. A refund of the overage would have to be paid to the consumer and the party seeking to cure the violation (either creditor or assignee) would have to follow certain policies and procedures for post-consummation review of loans. In its comment letter to the CFPB, Fannie Mae suggested...

The presidents of all 12 Federal Home Loan Banks are in talks with the Federal Housing Finance Agency over a newly issued moratorium on nonbank mortgage firms – mostly mortgage real estate investment trusts – gaining access to the system’s borrowing window through a captive insurance affiliate. The 90-day moratorium was voluntarily put in place by the FHLB presidents on June 12, said a spokesman for the Council of Federal Home Loan Banks, a trade group of sorts for the 12 regional government-sponsored enterprises.

Fannie Mae and the Federal Home Loan Bank of Chicago were among the public commenters supporting – with some key revisions – the CFPB’s proposed “right to cure” a mortgage made in good faith that inadvertently exceeds the 3 percent points-and-fees cap under the bureau’s qualified mortgage standard.Earlier this year, the CFPB proposed allowing a cure for a points-and-fee violation if three criteria are satisfied, the first of which is if the creditor in good faith intended to originate the loan as a QM and the loan otherwise meets the requirements of a QM. Additionally, the creditor or the assignee has to refund to the consumer the dollar amount by which the loan's points and fees exceed the applicable limit and ...

Redwood Trust late last week struck a deal with the Federal Home Loan Bank of Chicago to purchase fixed-rate jumbo mortgages from FHLBank members participating in the Mortgage Partnership Finance Program. Redwood will be the sole investor in “high balance” mortgages from the new MPF Direct program for three years. The program is subject to final approval from the Federal Housing Finance Agency. Officials at Redwood said the real estate investment trust plans to start investing in MPF Direct loans during the second half of this year. The loan limit for the MPF Direct program is...

Redwood Trust could boost its jumbo acquisitions by $5.0 billion a year, according to industry analysts, due to a new partnership with the Federal Home Loan Bank of Chicago. The real estate investment trust announced last week that it has an exclusive three-year deal to purchase “high balance” mortgages from FHLBank members participating in a new product under the Mortgage Partnership Finance Program. Under the new MPF Direct, members of an ...

Redwood Trust late this week unveiled a three-year agreement with the Federal Home Loan Bank of Chicago whereby the real estate investment trust will purchase residential “high balance” loans from any member of the entire FHLBank system. The loans will be originated by members of the FHLBank system. Those lenders will then sell the mortgages to the Chicago FHLBank as part of the Mortgage Partnership Finance Program, which will then upstream the product to Redwood. The loans will have balances above the Fannie Mae/Freddie Mac loan limit of $625,500.

A North Carolina federal judge announced from the bench this week he is considering dismissing a Justice Department fraud case against Bank of America, citing a less than overwhelming preponderance of evidence. U.S. District Judge Max Cogburn said during a hearing that he is leaning toward shutting down the DOJ’s case as per the March recommendation of U.S. Magistrate Judge David Cayer, who found that the Justice Dept. has failed to prove the bank made “material” false statements to the Federal Housing Finance Board. “DOJ may not have...