CFPB Raises TILA Reg Z Exemption Threshold. The CFPB raised the asset size for banks exempt from the requirement to establish an escrow account for higher-priced mortgages under Regulation Z (Truth in Lending Act) from $2.028 billion to $2.060 billion, as of Jan. 1, 2015. The adjustment is based on the 1.1 percent increase in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November 2014. The adjustment to the escrow exemption asset-size threshold will also increase a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. CFPB Increases HMDA Reg C Exemption Threshold. The bureau slightly ratcheted up the asset- size exemption threshold for financial institutions reporting ...
The Securities and Exchange Commission uncovered a number of compliance issues at the credit rating services in 2013, according to a report released by the federal regulator at the end of December. However, compliance is improving compared with previous exams conducted by the SEC. In exams covering rating activity in 2013, the SEC found issues ranging from conflicts of interest to adherence to policies for reviewing credit ratings to the use of affiliates or third-party contractors. The SEC didn’t single out any of the rating services other than to note whether an issue occurred at one of the big three rating firms or at one of several smaller rating services. For example, the SEC said...
The U.S. non-agency MBS space is looking more inviting these days, even though progress is painfully slow and there remains plenty of room for improvement, analysts at Fitch Ratings have concluded in a report out this week. The Fitch analysts said that the underwriting of residential mortgages has improved dramatically since the financial crisis, with recent vintages demonstrating the best performance on record so far. “New legislation has completely eliminated...
MBS investors this week continued to bid up the price of agency product in the wake of rock-bottom oil prices and economic fears about Asia, Europe and any oil-producing nation that relies too heavily on the energy sector. According to figures compiled by MBS Quoteline, at one point this week investors were paying 105.10 for Fannie Mae MBS with a coupon of 3.5 percent. Back in October the bid on the Fannie 3.5 was a mere 101.83. “Who would pay 105...
The Basel Committee on Banking Supervision recently proposed replacing credit ratings with loan-characteristic metrics for determining capital requirements on bank holdings of residential MBS and commercial MBS. Federal regulators in the U.S. note that the proposal is preliminary and any changes to U.S. capital requirements will go through a notice and comment process separate from the BCBS’ activity. The current standardized approach established by Basel for determining capital requirement riskweights prescribes the use of external credit ratings for residential MBS and commercial MBS, among other holdings by banks subject to capital requirements. “While acknowledging that credit rating agencies play an important role in financial markets and that external credit assessments provide valuable information that may assist in the analysis of credit risk exposures, the hard-wiring of external credit assessments into standards, laws and regulations may often lead...
Bank of America’s never-ending litigation woes spilled into 2015 as Ambac Assurance hit the bank with a new lawsuit related to toxic mortgages. Credit Suisse and Wells Fargo also welcomed the new year facing MBS lawsuits. According to analysts at Stone Fox Capital, an investment advisory firm, Ambac is claiming $600 million in losses, which arose from insuring approximately $1.7 billion in MBS transactions from 2005 to 2007. The MBS were issued by Countrywide Financial, which BofA acquired in 2008 and has been the principal cause of its legal headaches ever since. Ambac emerged...
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