The Consumer Financial Protection Bureau should remove the cap on debt-to-income ratios that applies to certain qualified mortgages, according to a proposal by the Housing Finance Policy Center. Such a move could boost non-agency lending, according to industry analysts. The CFPB is currently assessing whether changes are needed for QM standards, including potentially addressing the so-called government-sponsored enterprise patch. The patch allows mortgages with DTI ratios ...
The Securities and Exchange Commission levied $16.3 million in penalties against Moody’s Investors Service last week to settle charges involving internal control failures and failures to clearly define and consistently apply credit rating symbols. The bulk of the fine relates to more than 650 non-agency mortgage-backed security ratings issued between 2010 and 2013 that subsequently had to be corrected. Sens. Mark Warner, D-VA, and Mike Rounds ... [Includes four briefs]
Home Equity Conversion Mortgage originations fell dramatically in the second quarter, raising the possibility of a long reverse-mortgage winter in 2018, according to an Inside FHA/VA Lending analysis of HECM data. HECM production fell a whopping 40.9 percent in the second quarter from the previous period. Total HECM originations stood at $8.6 billion by the six-month mark, down 8.3 percent from the prior year. Traditional HECMs, which exclude purchases and refinances, accounted for 80.5 percent of FHA-insured reverse mortgages originated during the first half of 2018. The amount of funds available at loan origination for the first six months totaled $4.7 billion. Analysts blame the low HECM originations on the new lower Principal Limit Factors (PLFs) for HECMs, which became effective in FY 2018. Under the HECM final rule issued last year by the Department of Housing and Urban Development, principal limits [Chart]
Industry participants and the Treasury Department want the Federal Communications Commission to change its rules to help servicers communicate with borrowers without the threat of costly fines.
Any changes to the Community Reinvestment Act should strengthen – not weaken – banks’ obligations to meet the needs of minority and low-income communities and expand access to mortgage credit in historically redlined areas, said civil rights and consumer advocacy groups.
Two federal government agencies have reopened the debate over the use of a disparate-impact analysis to show discrimination against protected classes. It’s unclear how much the agencies can do in reworking their regulations, or how aggressive they will be in taking up cases based on the theory.
The Urban Institute advocates dropping the debt-to-income cap for qualified mortgages to level the playing field between the government-sponsored enterprises and the private market.
One housing lobbyist dismissed the bill as misguided, adding: “This is like someone laying on their death bed after drinking and sinning and finally realizing they need to get baptized.”
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