Nevada Bill Would Conflict With CFPB Servicing Rules. Last week, the Mortgage Bankers Association wrote members of the Nevada Assembly Judiciary Committee to warn that state Senate Bill 321, which would enact state-specific mortgage servicing rules, would conflict with the CFPB’s comprehensive, national servicing rules that were finalized in January. S.B. 321 would, among other things, authorize a defendant in a judicial foreclosure action to elect mediation...

May/to be announced: The House Financial Services Committee has reportedly called upon two, as of yet unnamed CFPB officials to testify at a hearing to be announced later this month on the agency’s ability-to-repay, ‘qualified mortgage’ rule that was promulgated in January. Additional details were not available as Inside the CFPB went to press. May 8: The bureau plans to host a field hearing at Miami Dade College in Florida “on student loan borrowers,” and expects to feature remarks from Director Richard Cordray...

Standard & Poor’s, along with Moody’s Investors Service, last week settled a lawsuit involving their pre-financial crisis securities ratings before it got to a jury trial, but S&P suffered a setback with another ratings challenge lawsuit brought by Connecticut state officials. Experts predict a pickup in MBS litigation ahead of pending filing deadlines for legal challenges. S&P and Moody’s reached the confidential settlement with a group of 14 plantiffs led by Abu Dhabi Commercial Bank and King County, WA. Abu Dhabi and the over investors filed suit in 2008 and 2009 in Manhattan federal court claiming that the defendants misled them by allegedly inflating ratings on two structured investment vehicles they purchased. By settling the investors’ lawsuit, which claimed $638 million in losses, S&P and Moody’s were able...

There were no real surprises this week from the Federal Open Market Committee, which announced it plans to continue purchasing additional agency MBS at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. But observers continue to contemplate the Fed’s eventual exit strategy and how it will affect the markets. “The committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS in agency MBS and of rolling over maturing Treasury securities at auction,” the FOMC said in what is becoming standard, boilerplate language. “Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.” Also, the committee plans...

Federal regulators said they will collectively work with Congress to reduce the agency market share of MBS issuance. The members of the Financial Stability Oversight Council said completion of the qualified-residential mortgage rule will also help increase non-agency activity. “The council recommends that the Treasury Department, the Department of Housing and Urban Development, and the Federal Housing Finance Agency continue to work with Congress and other stakeholders to develop and implement a broad plan to reform the housing finance system,” the FSOC said in its 2013 annual report, released late last week. Tobias Adrian, a vice president at the Federal Reserve Bank of New York and contributor to the report, said...

Repurchase agreements remain an important source of funding for agency MBS, collateralized mortgage obligations and other asset classes despite continued concerns about liquidity and regulatory risks, according to a Fitch Ratings analysis. As of March 2013, an estimated $1.83 million in assets were financed by the U.S. tri-party repurchase market, according to Fitch analysts Martin Hansen, Robert Grossman and Kevin D’Albert. The analysts noted...

Fannie Mae and IBM are working together on at least one big technology project: a new data center. But is the relationship about to go even further? Meanwhile, MBS issuance stayed hot in April.

The American Securitization Forum proposed a number of regulatory and legislative changes last week to increase non-agency activity. The proposed changes were prompted by recent meetings with members of Congress. “The proposals can be implemented in the short term to expedite the process of bringing private capital back to the mortgage market by incrementally reducing the government-guaranteed market well below the current 90 percent share,” the ASF said. The ASF called for reform of the ...

A bipartisan group of members of the House Financial Services Committee is coming to agreement on portions of pending legislation to increase non-agency activity. Rep. Scott Garrett, R-NJ, is set to introduce legislation shortly that has some support from Rep. Maxine Waters, D-CA, the ranking Democrat on the committee. Garrett’s “Private Mortgage Market Investment Act” was approved on a party-line vote by the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises ...

In response to concerns from industry participants, the Consumer Financial Protection Bureau recently issued proposed clarifications to its ability-to-repay and servicing rules. The proposal includes changes to underwriting standards for non-agency “qualified mortgages.” The debt and income ratio standards for non-agency QMs were included in Appendix Q of the ATR rule. The standards were largely based on the FHA’s underwriting process. “The bureau has received numerous inquiries ...