The Federal Reserve’s decision late last year to taper its agency MBS purchases appears to have contributed to higher mortgage rates, which in turn has helped lead to “significant reductions” in Fannie Mae and Freddie Mac guaranty fee revenue on MBS issued so far this year, according to the Federal Housing Finance Agency’s Inspector General. The evaluation report issued by the IG late this week concluded that continued tapering by the Fed and the eventual reduction of its massive MBS portfolio could have an “adverse impact” upon the financial performance of the two government-sponsored enterprises. “Although the Federal Reserve’s [quantitative easing] programs benefitted the enterprises’ financial condition in 2012 and 2013, its decision, among other factors, in late 2013 to taper its MBS purchases contributed...

A New York trial court judge has dismissed an investor lawsuit alleging fraud by Merrill Lynch in the sale of residential MBS because the plaintiffs failed to meet the state’s pleading standard for fraud claims. Justice Charles Ramos of the New York Supreme Court dismissed an amended complaint brought by Phoenix Light SF Ltd. and other investors against Merrill Lynch and several big banks. The complaint combined...

The Conference of State Bank Supervisors this week formed a task force on mortgage servicing rights to develop options for capital requirements for nonbank servicers. The task force includes representatives from nine state regulators, including the New York Department of Financial Services.

The Consumer Financial Protection Bureau this week finalized a rule change that allows lenders to fix inadvertent mistakes that send mortgages over the 3 percent cap on points and fees for qualified mortgages.Under the “right-to-cure” amendment, a lender can, under limited circumstances, re-fund the excess amount of interest to keep the loan a QM.

Note to Ocwen management: every US employee is a potential mortgage customer. Think about it.

The non-agency mortgage-backed securities market got clarity about risk-retention requirements in a new final rule approved this week by six federal regulators. Given current market conditions, it is unlikely to have any impact. The regulators created an exemption big enough to drive a truck through. Sponsors of non-agency MBS backed by qualified residential mortgages are not required to retain a 5 percent interest in the transaction. As expected, the QRM parameters were lined up with ...

Lenders have a number of underwriting options under the ability-to-repay rule when originating mortgages for self-employed borrowers, according to officials at the Federal Deposit Insurance Corp. Self-employed borrowers account for a sizeable portion of the potential customer base for jumbo mortgages. The FDIC hosted a conference call this week to address concerns banks have raised regarding the Consumer Financial Protection Bureau’s ATR rule, and one of the most ...

California continued to dominate jumbo originations in 2013, according to an Inside Nonconforming Markets analysis of data from the Home Mortgage Disclosure Act. The $96.74 billion in jumbos originated in California in 2013 accounted for 36.9 percent of total jumbo production during the year. The analysis defines jumbos as loans that exceed a county’s government-sponsored enterprise loan limit for 1-unit mortgages. If the county isn’t available, data cover ... [Includes one data chart]

The New York Department of Financial Services has found serious issues at Ocwen Financial, including the backdating of “potentially hundreds of thousands” of letters to borrowers, the NYDFS said in a letter to the nonbank servicer released this week. The allegations could be the most damaging yet for Ocwen, which has faced concerns from the NYDFS since February when Ocwen placed a planned $39.2 billion mortgage acquisition on indefinite hold in an effort to resolve issues raised by the agency ...

The Consumer Financial Protection Bureau this week issued a final rule providing lenders with a right to cure a mistake when the points and fees on what was intended to be a qualified mortgage inadvertently surpass the allowable points-and-fees cap on QMs. Points and fees charged to a borrower for a QM generally can’t exceed 3.0 percent of the loan principal at the time the loan is made. If a lender discovers after the loan has closed that the ... [Includes three briefs]