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 ...
Fannie Mae is starting to market a risk-sharing transaction to investors. A Fannie spokesman said the government-sponsored enterprise is working with the Federal Housing Finance Agency to meet the goals set by the conservator of the GSEs. Mark Lefanowicz will be the CEO of Fenway Summer’s mortgage venture, according to an announcement this week by Raj Date, the founder of the firm. Fenway Summer plans to originate non-qualified mortgages and Lefanowicz has previously worked at ... [Includes five briefs]
The Department of Housing and Urban Development is phasing out the Saver and Standard loan products under the Home Equity Conversion Mortgage program in favor of a new reverse mortgage that limits the amount of money a borrower can draw at closing to 60 percent of the value of the home. The fixed and adjustable HECM Standard and Saver options will still be available until Sept. 29, said HUD. The revised principal limit, pricing and disbursement policies for the new HECM product will become effective on Sept. 30. The revised HECM guidance also ...
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