Some mortgage servicers face capacity issues when it comes to the plethora of new regulatory requirements and need outsource assistance, but the rest of the industry will need help with the process requirements and planning, according to a compliance service provider. “While all mortgage servicers are facing challenges in staying compliant with the industry’s many changing regulations, the nature of those challenges varies by the organization’s size and require varying solutions,” said Loren Morris, senior vice...

Various segments of the financial services industry are struggling with the CFPB’s trial disclosure programs proposal, with some of the trade representatives appealing to the bureau for some changes or assistance. The proposed policy would allow companies to test new consumer disclosures on a case‐by‐case basis. The CFPB would approve limited‐time exemptions from federal disclosure laws to enable the companies to conduct the trials, and the bureau would use the resulting information to improve its disclosure rules and model...

Federal regulators should consider aligning the pending risk retention rule’s “qualified residential mortgage” standard with the “qualified mortgage” standard under the ability‐to‐repay rule the CFPB finalized on Jan. 10, Federal Reserve Governor Daniel Tarullo said. Defining QRMs as QMs would eliminate the downpayment requirement initially proposed for QRMs and allow greater access to credit for borrowers than a more stringent QRM definition, he said at a Senate Banking, Housing and Urban Affairs Committee hearing on...

CFPB Remains on Radar of Hostile House GOP. The activities and influence of the CFPB will be a subject of keen interest to hostile Republicans on the House Financial Services Committee, according to the committee’s recently published agenda for the 113th Congress. The committee said it will scrutinize the CFPB’s regulatory, supervisory and enforcement initiatives to make sure they protect consumers against unfair and deceptive practices without stifling economic growth, job creation or reasonable access to credit. “In...

Monday, February 25: Comments are due on the CFPB’s proposed amendments to Regulation Z (ability-to-repay rule). Tuesday, February 26: Federal Reserve Board Chairman Ben Bernanke is scheduled to appear before the Senate Banking, Housing and Urban Affairs Committee to deliver the central bank’s Semiannual Monetary Policy Report to the Congress. The Senate Finance Committee is scheduled to vote on President Obama’s nominee for Treasury Secretary, Jack Lew, the president’s former chief of staff and a former official at...

The Department of Justice and the Securities and Exchange Commission are likely to pursue more mortgage-related lawsuits due to pressure from Congress, according to former federal attorneys. “The fact that the attorney general now speaks of financial fraud enforcement as one of the top three priorities of the Department of Justice, just after terrorism and keeping people safe in their communities, trickles down to the lowest levels of the department and elsewhere in terms of the dedication of resources, the coordination, the training, the case referrals,” said Andrew Schilling, a partner at the law firm of BuckleySandler and a former chief of the civil division of the U.S. Attorney’s Office for the Southern District of New York. The latest pressure came...

Despite softening involvement during the last quarter of 2012, most of the top real estate investment trust MBS investors had healthy increases in their portfolios over the last year, including six that showed triple-digit increases, mostly on the strength of an active first half of the year. According to a new analysis by Inside MBS & ABS, REIT MBS investors as a group increased their MBS holdings by 47.4 percent in 2012, to a total $357.45 billion, despite a collective shrinkage of 4.1 percent during the fourth quarter of the year. All but $7.49 billion were in agency MBS. The biggest year-over-year portfolio gains were seen...[Includes one data chart]

Moody’s Investors Service and Fitch Ratings have downgraded the senior unsecured and issuer default ratings of The McGraw-Hill Companies, parent of Standard & Poor’s, to below A-level ratings with a negative outlook. The downgrades are largely due to the Department of Justice’s recent lawsuit regarding ratings of collateralized-debt obligations and rating models for non-agency MBS. “The Baa2 rating balances the company’s history of prevailing in its legal defenses against the potentially substantial negative credit effects that could result from adverse litigation or settlement outcomes,” Moody’s said after downgrading McGraw-Hill’s senior unsecured rating from A3 late last week. “In addition, the management focus and direct costs involved in defending litigation may be a persistent drag on the company’s operations over the intermediate term.” Moody’s said...

Sellers of jumbo whole loans into the secondary market are getting prices of up to 103 – and in some cases more – which on paper might throw a monkey wrench into the economics of trying to create a new MBS, but it’s not turning out that way. According to loan traders and industry consultants, MBS spreads to Treasuries have tightened over the past several weeks, making the economics of issuing a security better, even though the price for the underlying product might look a bit rich for potential issuers. “The cost of funds are going down,” said one trader. According to Craig Cole, a principal in Emerald Consulting LLC, the price paid...

Two months back Macquaire Equities Research issued a report declaring that investing in agency MBS “is like playing a game of chicken.” The analytics firm was speaking mainly about REITs, advising its clients to “take the dividends and run.” Its chief concern was that MBS investing REITs aren’t diversified. “We spoke with agency REIT management teams and found that while the current environment is challenging, for the most part they remain committed to the agency MBS asset class,” wrote Macquarie analyst Jasper Burch. Earlier this month, hedge fund giant Cerberus Capital filed...