A lack of formal guidance from the Consumer Financial Protection Bureau regarding TRID mortgage disclosures won’t prevent rating services from placing ratings on new non-agency MBS. The rating services are even willing to rate new deals before the Structured Finance Industry Group releases standards for the handling of TRID issues by third-party due diligence firms. However, issuers and investors appear to be less comfortable with liability from the rule the CFPB implemented in October combining the disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act. Save for a $331.95 million jumbo MBS issued by Two Harbors Investment at the end of March, no firm has issued a deal that includes loans subject to TRID. On March 18, SFIG proposed...
Mortgage trading desks the past few months have seen a noticeable increase in whole loan trading tied to seasoned Fannie Mae and Freddie Mac loans, according to traders interviewed this week by Inside MBS & ABS. Jason Eisendrath, director of loan sale strategies for Mortgage Delivery Specialists, said the sellers include not only money-center banks, but credit unions. “The credit unions, in particular, are holding a lot of [government-sponsored enterprise] paper,” he said. MDS is a part of Mortgage Industry Advisory Corp., New York. It’s...
The alternatives to credit ratings mandated by the Dodd-Frank Act aimed to address contributors to the financial crisis have their own challenges, according to a new report from the Treasury Department’s Office of Financial Research. John Soroushian, a research analyst for policy studies at the OFR, noted that before the financial crisis, rating services had an incentive to inflate ratings for MBS, ABS and other investments to expand their business. He said rating services were “key enablers” in the creation of MBS and collateralized-debt obligations. “Without ratings, it would have been...
The Federal Reserve Open Market Committee concluded its regularly scheduled meeting earlier this week and, to no one’s surprise, decided yet again to keep its interest rate powder dry for the time being. The people who parse FOMC statements for a living derived some nuanced significance from a few wording changes, but are split on whether and when there will be an increase this year. The Fed noted that labor market conditions have improved further even as growth in economic activity appears to have slowed. “Growth in household spending has moderated, although households’ real income has risen at a solid rate and consumer sentiment remains high,” said the U.S. central bank. “Since the beginning of the year, the housing sector has improved further but business fixed investment and net exports have been soft.” Meanwhile, inflation has continued...
The Financial Accounting Standards Board has proposed technical corrections and changes to its codified accounting handbook for private companies, including revisions to guidance relating to FHA and VA loans as well as transfers and servicing of financial assets. The proposed updates respond to suggestions by stakeholders and affect a wide variety of topics in the Accounting Standards Codification, which was established in September 2009 as a comprehensive source of authoritative generally accepted accounting principles used by the private sector. Among other things, a proposed amendment to Subtopic 860-20, Transfers and Servicing – Sales of Financial Assets would add...
Most borrowers are having a positive experience with the new loan estimate and closing disclosure forms now in use under the Consumer Financial Protection Bureau’s integrated disclosure rule known as TRID, according to a new survey from TD Bank. The rule integrates the consumer disclosures required under both the Truth in Lending Act and the Real Estate Settlement Procedures Act. Of those responding to the survey, 40 percent reported having had an “excellent” experience ...
Recent legal developments bode well for GSE shareholder lawsuits, according to one of the attorneys involved in the Perry Capital LLC v. Lew et al case where shareholders question the validity of the Treasury sweep of the profits of Fannie Mae and Freddie Mac.The D.C. Circuit Court heard oral arguments in the case on April 15 before three federal judges. The oral arguments took place as part of the appeal of the Fairholme Funds case dismissal in 2014, in which investors argued that the Treasury sweep violated the Housing and Economic Recovery Act. Hamish Hume, partner with Boies Schiller & Flexner, who argued before the panel of judges, said...
Molly Boesel, a senior economist at CoreLogic, noted that in judicial states, servicers must provide evidence of delinquency to the courts in order to move a borrower into foreclosure.
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