Ability-to-repay requirements set by the Consumer Financial Protection Bureau could increase losses, liquidation timelines and loan modifications for non-agency MBS, according to Standard & Poor’s. The new requirements take effect Jan. 10 and include assignee liability for certain loans. Liability from the ATR requirements and qualified-mortgage standards are only a concern for non-agency MBS issuers and investors if a borrower defaults. Given the exceptionally strong performance of jumbo MBS issued since 2010, S&P said the threat of higher losses will generally be mild for jumbo MBS. However, performance could eventually decline...
Representatives of community banks and credit unions again told sympathetic members of Congress about the harmful effects they anticipate upon their mortgage business once all of the related rules promulgated by the Consumer Financial Protection Bureau finally kick in come early January. “Every aspect of mortgage lending is subject to new, complex and expensive regulations that will upend the economics of this line of business,” Industrial Bank President and CEO Doyle Mitchell, representing the Independent Community Bankers of America, told members of the House Small Business Subcommittee on Investigations, Oversight and Regulations during a hearing this week. In particular, community bankers are deeply concerned...
Expect the largest U.S. banks to continue to feel the effects of the mortgage implosion as they pony up over $100 billion to get out from under their legacy mortgage litigation issues, according to an analysis by Standard and Poor’s. Since 2009, S&P noted that the big banks – Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo – together have paid or set aside more than $45 billion for mortgage representation-and-warranty issues and have incurred some $50 billion in combined legal expenses. This does not include...
House Financial Services Committee Chairman Jeb Hensarling does not have the votes needed to pass the Protecting American Taxpayers and Homeowners Act in the House and, unless he is willing to be flexible on certain key issues, the package may not reach the House floor at all in this Congress, according to industry lobbyists. Talk that Hensarling, R-TX, may make another push to get the PATH Act to the House floor surfaced this week following an opinion piece he published in the Nov. 27 issue of the Washington Times. In that op-ed, the chairman focused on the bill’s FHA reform component. Hensarling underscored...
The National Association of Independent Housing Professionals is maneuvering to sue the Consumer Financial Protection Bureau over broker disclosure of lender-paid compensation under the new ability-to-repay rule, but has yet to green-light an actual filing, pending a needed fundraiser, Inside Mortgage Finance has learned. “The CFPB is an independent agency with no oversight. From their inception on July 21, 2011, they have continually used their authority to pick winners and losers, causing unprecedented harm to consumers, mortgage brokers, loan originators, appraisers and other small-business housing professionals,” the organization said in a fund-raising appeal. “In order to stop these anti-consumer, anti-competition, job-killing rules, NAIHP is filing suit.” In its fundraising pitch, the group noted...
Originations of non-agency jumbo mortgages are stronger than the overall market, big banks are competing for wealthy borrowers and smaller firms are looking to enter the market. While jumbos originated in recent years have performed exceptionally well, Standard & Poor’s stresses that lenders should control their growth. “In our opinion, controlled growth is a key aspect to the comprehensiveness and ultimate success of an originator’s business strategy,” the rating service said in a recent overview of jumbo performance and best practices. “We believe that aggressive growth strategies could result in difficulties managing the quality of the origination process.” S&P noted...
In its fundraising pitch for its lawsuit against the CFPB, the NAIHP states that, “Neither Congress nor the executive branch holds any authority to curb CFPB’s behavior. Only the courts can stop them.”
In other subprime news, industry veteran Jon Daurio was recently in New York talking to potential investors about his new nonbank venture, Nikkael Capital Corp.
The Consumer Financial Protection Bureau, which inherited RESPA enforcement from HUD, has been leaning on this test in such enforcement actions of its own.
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