Mortgage regulators have sounded alarms and written new rules in response to the growing market share of nonbanks in the servicing market, but nonbank servicers were much more dominant 10 years ago. At the end of 2005, nonbanks accounted for 40.6 percent of mortgage servicing outstanding at the time. At the end of March 2015, nonbanks were making headlines because they had a combined 27.3 percent share of the market. …
A more subtle version of looking at redlining is becoming a major focus in fair-lending analysis, according to industry experts participating in a recent webinar sponsored by Inside Mortgage Finance. The Home Mortgage Disclosure Act was created in 1974 largely as a tool to fight discriminatory redlining, a practice named for maps that some lenders developed that literally outlined in red the parts of the market where they would not do business. HMDA’s focus on mapping…
The pending implementation of the integrated disclosures rule is driving a sea change in at least two critical areas: technology innovation and regulatory expectation. Competency with the former will facilitate the fulfillment of the Consumer Financial Protection Bureau’s so-called TRID rule, according to speakers at the American Bankers Association’s recent regulatory compliance conference in Washington, DC. The rule, now scheduled to take effect Oct. 3, requires new consumer disclosures under the Truth in Lending Act and…
The GSEs benefited from the Consumer Financial Protection Bureau’s free pass on the debt-to-income ratio requirements of the qualified-mortgage rule, resulting in a $132.9 billion increase in business.A new Inside Mortgage Finance analysis of mortgage-backed securities data illustrates that from the beginning of 2014 through the end of the first quarter of 2015, approximately 16.3 percent of the loans securitized by Fannie Mae and Freddie Mac had DTI ratios exceeding 43 percent. In the non-agency world, a qualified mortgage has to have a DTI ratio of 43 percent or less. While the government-insured market has its own QM rules that effectively ignore DTI, a loan eligible for sale to the GSEs is considered...
An increase in short-term interest rates will have an outsized impact on commercial MBS among structured finance assets, according to Moody’s Investors Service. In a report released last week, the rating service said higher interest rates will be credit negative for existing deal performance and new issuance for commercial MBS and largely neutral for residential MBS and most ABS sectors. As interest rates rise, Moody’s said term default risk on loans backing new issue commercial MBS will increase because the loans’ debt service coverage ratios will be lower than the DSCRs at the time of origination of loans in outstanding deals. “Rates on loans backing new conduit deals will increase, thereby reducing DSCR in relation to a given property’s cash flow,” the rating service said. “New conduit deals are typically backed by loan pools that were originated no more than ...
FBR Capital Markets analysts said the ruling allows the CFPB and the Department of Justice to retain their use of disparate impact under the Equal Credit Opportunity Act...
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