Although the CFPB said it was not going to revisit the TRID rule in its entirety when it issued its clarifying rulemaking earlier this year, a number of industry players were still disappointed that more problems were not dealt with. At the top of a list provided by the Community Mortgage Lenders of America of issues that still need to be addressed is loans submitted by mortgage brokers. “An issue that continues to vex the industry is how to treat loans from mortgage brokers that are submitted following rejection by another lender,” the trade group said. “As is typically the case, the submission of a loan to a wholesale lender by a mortgage broker, following rejection of the same loan ...
TRID-related mortgage defects dropped slightly during the second quarter of 2016, the first decline since the rule kicked in Oct. 3, 2015, ARMCO, a risk management technology vendor, said in a new quality control analysis. “TRID-related defects continue to be the leading area of concern in post-closing reviews; however, corrective action planning taken by the lending community has produced positive results that can now be visualized in the 2Q data,” said Phil McCall, chief operating officer at the company. According to the report, the overall critical defect rate dropped to 1.63 percent for the period ending June 30, 2016, the most recent period for which relevant data were available, thus ending the upward swing that stretched back to 3Q15. The ...
Mortgage programs that use less than 24 months of bank statements to verify a borrower’s ability to repay back a loan are riskier than more traditional mortgages and may be prone to running afoul of the CFPB’s ATR rule, according to a new report from Moody’s Investors Service. “Although longer-term bank statement programs would likely satisfy the CFPB’s ATR rule, short-term programs may not,” analysts at Moody’s said. “To fully understand cashflow patterns typical of the borrower’s line of work, the longer the track record, the better,” they added. “The fewer statements a program requires, the higher the likelihood for inconsistencies in the calculation of available income from loan-to-loan.” Under the ATR rule, as Moody’s noted, the originator is required ...
In the wake of the Wells Fargo scandal involving the creation of unauthorized deposit and credit card accounts, the CFPB has issued a warning to lenders about the risks consumers face from improperly managed sales incentives. In CFPB Compliance Bulletin 2016-03, Detecting and Preventing Consumer Harm from Production Incentives, the bureau remarked, “The risks these incentives may pose to consumers are significant and both the intended and unintended effects of incentives can be complex, which makes this subject worthy of more careful attention by institutional leadership, compliance officers, and regulators alike.” For instance, “Such incentives may lead to outright violations of federal consumer financial law and other risks to the institution, such as public enforcement, supervisory actions, private litigation, reputational ...
CFPB Issues Small Entity Compliance Guide for Its Mortgage Servicing Final Rule. The Consumer Financial Protection Bureau has published an updated version of its Small Entity Compliance Guide for its 2016 mortgage servicing final rule, incorporating amendments made to mortgage servicing provisions in Regulation X and Regulation Z. ... Bureau, Other Regulators, Hold Exemption Threshold for Appraisals for Higher-Priced Mortgage Loans Steady. The CFPB, the Federal Reserve and the Office of the Comptroller of the Currency decided to maintain at $25,500 the exemption threshold for appraisals for higher-priced mortgage loans under the Truth in Lending Act (Regulation Z). ...
The supply of outstanding single-family MBS grew by 1.0 percent during the third quarter of 2016, with strong demand from several key investor groups soaking up new issuance, according to a new analysis by Inside MBS & ABS. The agency MBS market grew by 1.4 percent from the end of June, reaching $5.948 trillion. Ginnie Mae continued to be the fastest-growing program, with total MBS outstanding climbing 2.2 percent during the third quarter to $1.631 trillion. Fannie Mae saw...[Includes two data tables]
Risk-sharing transactions from Fannie Mae and Freddie Mac have delivered strong returns for investors in the past year, but that could change under the monetary policies of the Trump administration, according to analysts at Bank of America Merrill Lynch. The analysts recently dialed down their recommendation on the risk-sharing transactions issued by the two government-sponsored enterprises to “underweight.” “Trump’s victory paves...
Origination of commercial mortgages could reach $515 billion this year, a slight improvement over 2015, but more lenders – life insurance companies and banks, in particular – are keeping the loans on their books, which doesn’t bode well for CMBS issuance. It’s the same conundrum facing the jumbo residential market: plenty of lending, but not so much in the way of securitization. As Inside MBS & ABS reported recently, issuance of CMBS increased...
New non-agency MBS issued in 2017 will likely include more diversified collateral and feature some structural changes, analysts at Moody’s Investors Service said in a new report this week. The rating service projected that non-agency prime jumbo volume will remain steady in 2017, while issuers will continue to explore non-traditional asset types, such as re-performing and non-performing loans, reverse mortgages, non-qualified mortgages and nonprime transactions. “Although prime jumbo deals will start to include loans with slightly lower FICOs and higher loan-to-value ratios than those loans included in 2016 transactions, collateral quality will remain...
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