New GSE stress test results released by the Federal Housing Finance Agency this week reveal what many in the industry have been talking about for the past year: Because Fannie Mae and Freddie Mac are not allowed to build capital, they would be forced to tap Uncle Sam once again for cash assistance should a financial calamity strike the nation. If a severe recession hits, Fannie and Freddie would need Treasury draws ranging from $84.4 billion to $190 billion, depending on the treatment of deferred tax assets, according to new calculations made by the GSEs and the FHFA. Adjustments to DTAs have allowed the two to book huge earnings the past year, but those accounting adjustments are now running out.

Did someone in the mortgage industry actually ask one of the GSEs recently to increase the 25 basis point servicing fee that it pays to residential servicers?

This week’s abrupt, last-minute postponement of a much-anticipated markup of a Senate housing finance reform draft bill effectively doomed the prospects of the legislation making it to a floor vote, note industry observers. The delay came amid continued progressive dissatisfaction with the legislation and an increasingly bold effort by advocates to keep Fannie Mae and Freddie Mac alive. Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, announced to a packed committee chamber that they would delay consideration of S. 1217 in order “to build a larger coalition of support.”

Charge-offs in the credit-card ABS sector reached a new low in the first quarter of 2014, due mostly to a steady decline in delinquencies and lower bankruptcy rates, according to Fitch Ratings. Loss rates continued to break new records heading into 1Q14, falling to 2.89 percent during the latest March distribution period, even as average charge-offs dropped to a record 3.00 percent for 1Q14 from 3.04 percent in 4Q13. “This marks 15 consecutive quarters of improvement and is approximately 25 percent lower year-over-year,” said Fitch Ratings Credit Card ABS Group Managing Director Michael Dean and Director Herman Poon in a new report. Late payments also fell...

Johnson-Crapo requires 12 percent mortgage insurance if the LTV exceeds 80 percent but is no more than 85 percent; 25 percent MI if the LTV exceeds 85 percent but no more than 90 percent; and 30 percent MI if the LTV exceeds 90 percent.

There’s a growing concern among participants in the secondary market that legislation in the Senate to reform the government-sponsored enterprises won’t be able to allow the to-be-announced market to function. The latest anxieties were raised by officials at Fannie Mae and Freddie Mac, whose securities flourish in the TBA market. Legislation in the Senate from Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, calls for the preservation of the TBA market but doesn’t provide any roadmap for how the proposed Federal Mortgage Insurance Corp. should accomplish that feat. “Unless the FMIC sets...

Additional industry layoffs are likely in the months ahead. In the first quarter, all lenders originated just $235 billion in mortgages. It was the weakest production quarter in 14 years.

Consumer Financial Protection Bureau examiners have reportedly become suspicious of certain mortgage banking executives’ participation in the exam process and escalated their interaction by pressing them to provide their input under oath. Officials at the consulting firm of Garrett, McAuley & Co. reported a disturbing development at a mortgage company in a Mid-Atlantic state undergoing a CFPB exam. “The examiner-in-charge apparently thought that the owner was lying, and the CFPB now wants to question him under oath,” principal Joe Garrett said in a recent note to clients. “Under oath? Whether or not they can prove...

The New York Department of Financial Services expanded its investigation of nonbank servicers, raising concerns about sales of real estate owned properties for Ocwen Financial by Altisource Portfolio Solutions, an affiliate of the nonbank servicer. Officials at Altisource downplayed the concerns late last week and said the company plans to continue to grow with Ocwen. In February, NYDFS Superintendent Ben Lawsky put on indefinite hold a planned servicing transfer from Wells Fargo to Ocwen on mostly non-agency mortgages with an unpaid principal balance of $39.2 billion. Lawsky has sent a number of questions to Ocwen as well as Nationstar Mortgage based on concerns that the nonbank servicers were growing too quickly. Officials at Ocwen note...

Mortgage lenders scored a victory this week when the Consumer Financial Protection Bureau announced it will grant lenders a “right to cure” home loans that inadvertently exceed the 3 percent points-and-fees cap for qualified mortgages. “The bureau is proposing to allow for a post-consummation cure of points-and-fees overages only where the loan was originated in good faith as a qualified mortgage to ensure that the cure provision is available only to creditors who make inadvertent errors in the origination process and to prevent creditors from exploiting the cure provision by intentionally exceeding the points-and-fees limits,” the agency said. Currently, under the CFPB’s ability-to-repay rule, the points and fees charged to a consumer on a QM loan generally cannot exceed...