Last week, the U.S. Supreme Court unanimously ruled that the Truth in Lending Act only compels a borrower to file a written notice within three years of consummation in order to rescind a mortgage if the lender fails to provide the required disclosure, instead of formally filing a lawsuit within that period. This could spell bad news for the non-agency RMBS space, according to an amicus brief the Structured Finance Industry Group filed with the high court in the case, Jesinoski v. Countrywide Home Loans, Inc. The first problem SFIG noted with the position that the SCOTUS eventually upheld is that it will have a chilling effect on non-agency MBS. “A determination that mere notice is sufficient to effect a rescission would reverberate through all segments of the RMBS market, creating significant hurdles for originators, issuers, ratings agencies, servicers, and trustees alike, while breeding doubt among investors regarding the value of future and already-issued private-label RMBS,” said the trade group. That’s...
Issuers of auto ABS are loosening underwriting standards and delinquencies on subprime auto loans are increasing, but industry analysts suggest that there is little cause for concern. Performance remains much stronger than the delinquencies seen during the financial crisis and issuers are unlikely to loosen underwriting to the extent seen in the run-up to 2008. For independent finance companies, 60+ delinquencies increased by 13.7 percent in the past year, from 1.82 percent in the third quarter of 2013 to 2.07 percent in the third quarter of 2014, according to the latest data from Experian Automotive. Independent finance companies focus primarily on lending to subprime borrowers, and their delinquency trends outpaced any increase in delinquencies for other types of lenders that lend primarily to prime borrowers. Peter McNally, a vice president and senior analyst at Moody’s Investors Service, said...
Real estate investment trusts focused on the residential mortgage market had a stellar year in 2014, returning 19.4 percent to investors, a nice comeback from the year before when performance was measured at negative 12.7 percent. According to figures compiled by the National Association of Real Estate Investment Trusts, commercial financing REITs fared a bit worse, returning 14.5 percent compared to a mouth-watering yield of 41.8 percent in 2013. But now both sectors face...
Standard & Poor’s agreed this week to a settlement with the Securities and Exchange Commission and two state attorneys general regarding ratings on commercial MBS and non-agency MBS. Regulators suggest that further actions involving the ratings services are in the works, likely including a much larger settlement with S&P regarding activity before the financial crisis. S&P’s settlement this week involved post-2010 activity. The rating service agreed to pay the SEC and attorneys general for New York and Massachusetts more than $77 million. S&P will also take a one-year “timeout” from rating conduit/fusion commercial MBS. “They lied...
The CFPB and the Maryland AG also took action against former Wells Fargo employee Todd Cohen and his wife, Elaine Oliphant Cohen, for their alleged involvement.
A total of $185.32 billion of non-mortgage ABS were issued in 2014, the highest annual production level for the market since 2007, according to a new Inside MBS & ABS analysis and ranking. ABS issuance was up 12.0 percent from the prior year, with solid gains in three of the market’s key sectors: auto finance, credit cards and business loans. The weakest link was the student loan ABS market, where annual production fell 25.4 percent from 2013 and slipped to its lowest level since 1999. Vehicle finance deals were...[Includes two data charts]
MBA's Dave Stevens did not mince words, calling the CFPB product "the most misleading and inaccurate tool that will do anything but help prospective homebuyers.”
Shortly before he left office, the former chairman of the Senate Banking, Housing and Urban Affairs Committee urged the Consumer Financial Protection Bureau to fix a problem that may prevent some loans from being classified as qualified mortgages. Former Sen. Tim Johnson, D-SD, said the problem in the CFPB’s points-and-fees definition was the result of a drafting error in the Dodd-Frank Act, which established the qualified mortgage under the ability-to-repay regulation. Loans with points and fees exceeding 3 percent can still be legal under the ATR, but the lender doesn’t get the liability protection afforded QMs. “The calculation of points and fees for purposes of determining what is a qualified mortgage was not intended...
The Consumer Financial Protection Bureau this week made final two tweaks to its integrated disclosure rule that were proposed back in October, both of which will give mortgage lenders a little more flexibility. Under the first change, lenders will have to provide a revised loan estimate within three business days after a consumer locks in a floating interest rate. Under the original rule, lenders would have had to provide the revised LE on the date the rate was locked. “After hearing feedback from stakeholders, the bureau determined...
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