HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

The Department of Housing and Urban Development has issued a proposed rule establishing standards that FHA loans would have to meet to be considered “qualified mortgages,” varying slightly from the QM rule approved earlier this year by the Consumer Financial Protection Bureau. According to HUD, the proposal is aligned with the ability-to-repay criteria set out in the Dodd-Frank Act and the CFPB’s QM rule. The key difference is in the pricing threshold that puts QM loans in the safe harbor, rather than the less desirable rebuttable assumption category that exposes lenders to more legal risk. Under the CFPB rule, safe harbor QM loans must have...

Sellers to Fannie Mae and Freddie Mac will get a temporary, limited reprieve from repurchase requirements as the mortgage industry implements the Consumer Financial Protection Bureau’s ability-to-repay rule, according to new guidance from the two government-sponsored enterprises. “During the initial transitional period ..., Fannie Mae will not require repurchase of a loan on the grounds of noncompliance with the applicable QM-related points-and-fees eligibility requirement as long as it was otherwise eligible for acquisition,” the GSE said in a lender letter. “However, if a court of law, regulator or other authoritative body determines the loan exceeded the applicable QM-related points-and-fees limitation in violation of the CFPB final rule, such loan is subject to repurchase.” In addition, if Fannie determines...

The Federal Housing Finance Agency this week issued a final rule requiring annual stress tests for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, as mandated under the Dodd-Frank Act.

If mortgage lenders don’t have enough to worry about with six new major mortgage rules from the Consumer Financial Protection Bureau that all take effect in January, they also face a heavier Home Mortgage Disclosure Act reporting burden and perhaps a greater litigation threat from some developments at the bureau. Last week, as the Federal Financial Institutions Examination Council was releasing the 2012 HMDA data, the CFPB came out with a set of online HMDA tools to enable consumers to explore mortgage application and loan data at a local level. “Just as the real estate motto ‘location, location, location’ was...

The number of loans repurchased by lenders from Fannie Mae and Freddie Mac fell sharply during the second quarter from the record level set during the first three months of 2013, according to a new Inside Mortgage Finance analysis of repurchase disclosures by the two government-sponsored enterprises. In filings with the Securities and Exchange Commission, the two GSEs reported a total of $2.81 billion of mortgage repurchases during the second quarter, down 78.7 percent from the first quarter of 2013. GSE buybacks hit a record $13.21 billion in the first three months of 2013 as Fannie and Bank of America resolved their dispute over legacy loans sold to the GSE by Countrywide Financial. The settlement also helped wipe out...[Includes one data chart]

The Office of Management and Budget has cleared a proposed rule setting qualified mortgage standards for FHA-insured single-family mortgages for issuance in the coming weeks. The OMB signed off on the proposed standards on Sept. 12 and the Department of Housing and Urban Development has a few more refinements to perform before publishing the proposal for public comment. HUD declined to discuss the contents of the proposed standards or indicate a timetable for a final QM rule. Industry participants, on the other hand, said they would be surprised if ...

Revised risk-retention requirements proposed last week by federal regulators for certain non-mortgage ABS and commercial MBS are somewhat looser than the standards initially proposed in 2011. Perhaps most significantly, “blended pools” would be allowed for commercial mortgages, commercial real estate loans and auto loans, allowing issuers to mix qualifying loans and non-qualifying loans in the same security. Securitized loans that don’t meet qualifying underwriting standards will be subject to the 5 percent risk retention as required by the Dodd-Frank Act. Blended pools would be eligible for reduced risk retention, as low as 2.5 percent. “The agencies believe...

Federal regulators dealt the private mortgage insurance industry a setback last week when they opted to ignore the presence of private MI coverage in defining “qualified residential mortgages” under a new proposed rule governing securitization. The new rule will require issuers of mortgage securities that are not backed by QRMs to retain a 5 percent share of the risk. As a practical matter, it won’t apply to Fannie Mae and Freddie Mac business as long as the government-sponsored enterprises are in conservatorship, although this exemption would not necessarily be extended to any post-GSE entity that Congress may create. If the agencies stick...

With the most significant collection of regulations to hit the mortgage industry in decades just a few months away from implementation, mortgage lenders are feeling tremendous pressure and continue to clamor for relief from regulators. Last week, the Mortgage Bankers Association asked the Consumer Financial Protection Bureau for a grace period of six to 12 months before it takes enforcement actions under any of the new mortgage rules implementing the Dodd-Frank Act. “Since the rules were issued...