Thursday, Sept. 12: Now that Richard Cordray is “street legal” as the confirmed director of the CFPB, House Financial Services Committee Chairman Jeb Hensarling, R-TX, has decided to invite him before the panel to testify on the bureau’s third semi-annual report to Congress, which was released back in late March and covers the period from July 1, 2012, to Dec. 31, 2012. “The director of the CFPB is required by law to appear before the committee on a semi-annual basis to deliver a report on the CFPB,” says a hearing notice on the...
Securities issuers won a major victory as the revised proposed rule on risk retention issued by federal regulators last week removed the requirement for a premium capture cash reserve account. The highly controversial PCCRA was replaced with a fair value calculation requirement for retention which regulators said will increase the value of retained risk compared with the original proposal. “The ASF is extremely pleased to see the elimination of the premium capture cash reserve account provisions from the re-proposed rule,” said Tom Deutsch, executive director of the American Securitization Forum. “The provisions would have completely eliminated the economic incentives of securitizers to issue residential MBS and commercial MBS.” The original proposal generally measured...
Revised risk-retention requirements proposed last week by federal regulators for certain non-mortgage ABS and commercial MBS are somewhat looser than the standards initially proposed in 2011. Perhaps most significantly, “blended pools” would be allowed for commercial mortgages, commercial real estate loans and auto loans, allowing issuers to mix qualifying loans and non-qualifying loans in the same security. Securitized loans that don’t meet qualifying underwriting standards will be subject to the 5 percent risk retention as required by the Dodd-Frank Act. Blended pools would be eligible for reduced risk retention, as low as 2.5 percent. “The agencies believe...
Last month, senior staff from the Senate Banking Committee met with various industry “stakeholders” – including trade associations, consumer groups and academics – to hear their thoughts on housing finance reform and the fate of the GSEs.
Standard & Poor’s this week threw another counterpunch against the federal government’s civil fraud lawsuit filed earlier this year, slamming the litigation as “retaliation” for the rating agency’s August 2011 downgrade of the country’s AAA credit rating. The Justice Department in February filed a $5.0 billion lawsuit accusing S&P of knowingly inflating its ratings in residential MBS and collateralized debt obligations to boost its revenue and market share in the years leading up to the 2008 financial crisis. The filing in the U.S. District Court in Santa Ana, CA, by S&P’s parent company McGraw-Hill Co. seeks...
The U.S. Justice Department has subpoenaed documents from Clayton Holdings LLC, once Wall Street’s largest mortgage due-diligence firm, as investigators eye-ball the due diligence that was performed on residential MBS deals in the run-up to the financial crisis. According to Bloomberg, the Justice Department presented a subpoena to Clayton on July 1, requesting an extensive amount of documentation having to do with the firm’s work on such deals. The DoJ is apparently seeking internal communications related to a review of pools of loans, due-diligence reviews performed by Clayton, as well as all communication between the clients for whom the company performed such reviews and the employees with which they dealt. The subpoena is...
If the agencies stick with their current plan to extend QRM status to any home loan that meets the “qualified mortgage” safe harbor, regardless of downpayment amount, private MIs would have to sell their product based on its economic value.
With backing from President Obama, the Federal Housing Finance Agency is considering lowering Fannie Mae and Freddie Mac loan limits in 2014. Industry participants have used the potential change to call on the Consumer Financial Protection Bureau to alter requirements for qualified mortgages. “Assuming the loan limits are lowered, the problem of excluding too many loans from QM coverage could be addressed, at least temporarily, by modifying the ability-to-repay rule,” Pete Mills, a ...
Richard Johns, executive director of the Structured Finance Industry Group, said the SFIG is apprehensive about the overall effect the ability-to-repay rule and qualified mortgage provisions will have on jumbo mortgage lending. The SFIG recently met with the Consumer Financial Protection Bureau to discuss the issues. In a follow-up letter sent in August, the SFIG said its primary concerns are the effect the debt-to-income ratio requirement for QMs will have on borrower access to jumbos; the ...
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