Recent proposals by the Securities and Exchange Commission could eliminate or impose more regulatory burden on mortgage real estate investment trusts and complicate securitizations, experts warned. The SEC earlier this month launched a preliminary effort to reconsider the exemption that REITs currently have from the Investment Company Act. Although the agency did not propose any specific changes, the REIT industry and its supporters see the initiative as a potential game-changer for how they do business. The SEC concept release, at first blush, appears to “signal impending regulatory burdens for mortgage REITs and to...

The Securities and Exchange Commission this week approved a proposed conflict-of-interest rule that attempts to walk a tightrope between preventing abusive securitization practices and not interfering with legitimate competitive activity in the market. The agency got a lot of feedback on how to implement the Dodd-Frank Act conflict-of-interest provisions, including from the chief sponsors of the provisions in Congress. Senate Democrats Jeffrey Merkley (OR) and Carl Levin (MI) were largely inspired by dealings in which Goldman Sachs allegedly allowed a hedge fund to choose assets for a collateralized debt obligation and then...

With additional rulemaking still expected from the Consumer Financial Protection Bureau to flesh out some loan originator compensation provisions of the Dodd-Frank Act, state regulators are getting ready to release their own examination guidelines related to mortgage originator compensation for non-depository institutions, based on the Federal Reserve’s rule issued earlier this year. The Conference of State Bank Supervisors and the American Association of Residential Mort-gage Regulators have been working together since May drafting guidelines for implementation of the...

Regulators should take stronger actions to ensure that homeowners in need of loan modification are treated fairly and that servicers increase their efforts to implement newer Making Home Affordable (MHA) programs, according to a new Government Accountability Office report. The GAO said that while the Department of the Treasury has taken a number of steps to implement its previous recommendations to improve the program, it has not yet taken steps to improve servicer oversight, among other recommendations made by the watchdog agency. Treasury began publishing quarterly assessments of servicer performance under the Home Affordable Modification Program and...

The outstanding supply of home-equity loans in the market declined further in the second quarter of 2011, hitting its lowest level in almost six years, but there are signs that the HEL market is at least stabilizing. The Federal Reserve reported a balance of $904.4 billion of home-equity lines of credit and closed-end second mortgages outstanding as of the end of June, down 2.3 percent from the first quarter and 9.2 percent lower than a year ago. The vast majority of the HEL market is on the books of banks, thrifts and credit unions, which collectively held $827.7 billion in portfolio. Finance companies, some of them owned by... [Includes two data]

State regulators are gradually working through the pile of licensing applications submitted by mortgage companies and loan originators. The total number of unique entities holding state licenses increased 7.2 percent during the second quarter, reaching 140,421, according to an Inside Mortgage Trends analysis of data from the National Mortgage Licensing System. The vast majority of those licenses (76 percent) are held by individual loan officers. Regulators still had some 35,024 licensing applications pending at the end of June, but that was down 23 percent from the previous quarter. And the number of new applications submitted during...

The official watchdog of the Federal Housing Finance Agency says it will monitor and continuously assess the performance of its audits, evaluations and investigations of the Finance Agency over the next couple of years.The FHFA’s Office of Inspector General, which released its new strategic plan for the 2012-2014 fiscal years last week, said it has developed four core strategic performance goals: adding value, operating with integrity, promoting productivity and valuing employees.

With the mortgage finance industry in turbulence and a fast-changing regulatory landscape, banks have been forced to reevaluate how they optimize processes and become more cost-efficient, making “operational certainty the need of the hour,” according to an expert at a webinar held this week by NelsonHall. The market is seeing an increase in defaults but a decrease in mortgage originations, noted Sandip Sahni, practice head of business process services at Tata Consultancy Services. This has led to mortgage providers having to deal with fluctuations in volume and costs, and in response, service providers are creating more...

Two Ohio pension funds have filed suit in federal court against the Federal Housing Finance Agency to overturn a recent Finance Agency rule that could curtail any award for damages the funds might someday receive in their securities fraud suit against Fannie Mae. In papers filed in the U.S. District Court, District of Columbia, lawyers for the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio disputed a final rule issued…

Fannie Mae and Freddie Mac are reportedly in talks with the Securities and Exchange Commission to settle claims that the two GSEs failed to disclose to investors the companies’ exposure to risky subprime mortgages prior to the 2008 housing market crash.