The Federal Reserve’s opinion survey of senior loan officers has grown in scope to include some new mortgage categories, including qualified mortgage underwriting and non-QM underwriting. In brief, the Fed found that underwriting is easing slightly as demand slips modestly. “The January 2015 survey revised and expanded the residential mortgage loan categories to reflect the CFPB’s qualified mortgage rules and provide additional detail on important developments in the residential mortgage market both now and in the future,” the survey said. In particular, the survey included the following seven mutually exclusive categories of residential home-purchase mortgage loans: government-sponsored enterprise-eligible residential mortgages; government residential mortgages; QM non-jumbo, non-GSE-eligible residential mortgages; QM jumbo residential mortgages; non-QM jumbo residential mortgages; non-QM non-jumbo residential mortgages ...
OIG Expects to Finish Nine Audits, Evaluations of the CFPB This Quarter. The CFPB’s Office of Inspector General has a batch of ongoing projects related to the bureau that it expects to complete sometime during the first quarter, according to the OIG’s latest work plan, released early this week.Among the projects are audits of the CFPB’s contract management process, its diversity and inclusion processes, and it headquarters renovation project. Other projects with a first quarter 2015 completion timeframe are audits of the CFPB’s public consumer complaint database, the bureau’s space-planning activities, and the CFPB’s Tableau system, an application used to develop, publish, and view business intelligence data. Also up for completion this quarter is an evaluation of the CFPB’s ...
Although there’s been plenty of talk about the securitization of nonprime loans that don’t fit the qualified mortgage criteria finally taking off this year, it’s not looking like a good bet. “We can’t do a security this year,” said Jeff Lemieux, vice president at Bayview Asset Management, which has been actively buying non-QM product geared toward the self-employed. Bayview is purchasing...
Michael Stegman, a counselor to the Treasury on housing finance policy, said the exercise aims to solve the “chicken-and-egg” issue that some see as holding back non-agency MBS activity.
The Department of Justice and other allied parties this week reached a $1.375 billion settlement with Standard & Poor’s to resolve allegations that the firm’s investment-grade ratings misled investors into buying securities backed by badly underwritten mortgages. The agreement resolves the DOJ’s 2013 lawsuit against S&P and its parent, McGraw Hill Financial Inc., along with the suits filed by 19 states and the District of Columbia. Each of the lawsuits alleges that investors incurred substantial losses on residential MBS and collateralized debt obligations that carried S&P’s ‘AAA’ ratings, which effectively masked their true credit risks. S&P was accused...
Issuance of jumbo MBS and ABS has grown since 2010, but pending Federal Reserve actions regarding interest rates could stop the trend this year, according to industry analysts. The Fed is expected by many to increase interest rates for the first time in years, perhaps as soon as the end of the second quarter of 2015. Standard & Poor’s warned last week that interest rate hikes could threaten the still-rebounding structured finance market. “The Fed’s normalization of monetary policy could create...
If issuers were to include agency-eligible mortgages with slightly less than pristine underwriting standards in new non-agency mortgage-backed securities, the deals could receive ratings with credit enhancement levels similar to the levels on recent jumbo MBS, according to the results of an exercise released this week by the Treasury Department. Treasury asked six rating services to assign ratings to hypothetical non-agency MBS comprised of $19.75 billion of mortgages ...
One year after the Consumer Financial Protection Bureau’s standards for qualified mortgages took effect, lenders remain cautious about originating non-QMs. “Even though DBRS has seen a few lenders implementing non-QM programs that allow for back-end debt-to-income ratios as high as 50 percent and FICO scores as low as 600, DBRS expects that larger lenders, who are still recovering from the massive fines they had to pay for making subprime loans, will ...
A larger share of small portfolio lenders would qualify for exemptions from standards for qualified mortgages under a proposal issued last week by the Consumer Financial Protection Bureau. Among other issues, the CFPB proposed expanding the definition of “small creditor” from the current limit of 500 first-lien mortgages originated in a year to 2,000 mortgages. The new definition would exclude loans held in portfolio by the lender and its affiliates ...
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