The recent actuarial report that showed the FHA’s insurance fund is underwater to the tune of $16.3 billion ought to sound an alarm for policymakers to refocus the agency on its original public mission, some leading policy experts say, and perhaps even motivate them to resolve Fannie Mae and Freddie Mac while they’re at it. “I think FHA’s financial condition is extremely precarious – much worse than FHA and HUD are making it out to be,” said long-time critic Edward Pinto, a resident fellow at the American Enterprise Institute, a conservative think tank in Washington, DC, and a former official at Fannie Mae. As he sees it, today’s very low interest rate environment means the economic value of FHA’s forward mortgage fund really is a far worse at a negative $31 billion. “And when you throw in the negative on the reverse [mortgage] program, you get close to $35 billion.” Compounding the problem is...

Federal Reserve Chairman Ben Bernanke late last week reiterated his view that tight underwriting standards set by lenders are hindering a broader recovery of the housing market. Lenders, meanwhile, cite concerns with repurchases and regulatory uncertainty. Bernanke noted that low home prices and historically low interest rates have not prompted the “powerful housing recovery” that has typically occurred in the past after housing problems. “Unfortunately, while some tightening of the terms of mortgage credit was certainly an appropriate response to the earlier excesses, the pendulum appears to have swung too far, restraining the pace of recovery in the housing sector,” he said. More than half of the lenders that responded to the Fed’s senior loan officer opinion survey earlier this year said...

The conforming mortgage market continued to dominate new loan originations during the third quarter of 2012, accounting for a whopping 85.7 percent of the period’s robust $475 billion in new originations, according to a new Inside Mortgage Finance analysis and ranking. The conforming market – which includes loans with government insurance and conventional mortgages up to the eligible loan limit for Fannie Mae and Freddie Mac – represented 84.5 percent of new originations in 2011. During 2010, the conforming market accounted for a record 90.1 percent of new loan production. The jumbo sector made...[Includes two data charts]

Agencies Announce Increases in Dollar Thresholds for Exempt Consumer Credit and Lease Transactions. The CFPB and the Federal Reserve Board last week announced increases in the dollar thresholds in Regulation Z (Truth in Lending Act) and Regulation M (Consumer Leasing Act) for exempt consumer credit and lease transactions. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires yearly adjustments to these thresholds by the annual percentage increase in the Consumer Price Index for Urban Wage...

Two legal cases remain in play that are challenging some controversial recess appointments made by President Barack Obama earlier this year, one directly challenging the appointment of Richard Cordray as director of the CFPB, and another that has implications for the case. In the former, State National Bank of Big Spring, Texas, et al. v. Geithner, et al., currently before the U.S. District Court for the District of Columbia, federal bank regulatory agencies last week told a judge that the lawsuit should be...

Representatives of smaller financial institutions told officials at the CFPB recently they are apprehensive about regulatory overload and the fear that their ability to serve their local communities will be harmed by too much regulation coming too fast. The bureau got that message during separate meetings with its Community Bank Advisory Council and its Credit Union Advisory Council. In discussions about the challenges and opportunities in the post-financial crisis environment, advisory council members...

Although the CFPB has yet to reach its full staffing levels and seems to have its hands full with mortgage, credit card and payday lending issues, rules and regulations, it also has a number of efforts underway to address a variety of issues related to the financial abuse of older Americans ¨C including coming up with guidance for financial institutions. Last month was the inaugural meeting of the Elder Justice Coordinating Council, an 11©\agency body convened to ¡°shine a light on the disastrous impact of...

Adverse impact violations are the hardest to defend against and the ones causing the biggest settlements, according to Tammy Butler, the director of fair lending and compliance for Optimal Blue, a leading pricing engine. “In a nutshell, this means that your institution has a policy or criterion that has a disproportionate impact on the protected class population of the areas you serve,” she said in a recent blog. This can occur in the way that a lender prices loans or underwriting overlays. “So far, every lender that has been...

The CFPB recently launched Project Catalyst, an initiative it said is designed to encourage consumer] friendly innovation and entrepreneurship in markets for consumer financial products and services. gProject Catalyst is our effort to foster consumer-friendly innovation in the marketplace,h the bureau said. Through Project Catalyst, the CFPB is calling on innovators and entrepreneurs to help it by gimprovingh financial regulation to gbetter foster consumer]friendly innovation,h and in...

The CFPB has taken several steps to develop, document and implement an information security program. However, additional steps are needed if the bureau is to have an information security program that is consistent with the Federal Information Security Management Act of 2002, according to an audit report issued by the Federal Reserve’s Office of Inspector General. “We recommend that the Chief Information Officer develop and implement a comprehensive information security strategy that identifies specific goals...