Two of the three biggest barriers to a return of the non-agency mortgage sector – the premium capture cash reserve account and the qualified mortgage definition – are embedded in the Dodd-Frank Act, industry officials say. And the third is what’s not in the controversial law: any substantive reform of Fannie Mae and Freddie Mac. The biggest challenge to reducing the government’s domination of the mortgage market is the lack of direction on the government-sponsored enterprises, said Tom Deutsch, executive director of the American Securitization Forum, during a hearing this week.

Mortgage securities investors have as much at risk as lenders from the emerging ability-to-repay consumer protection standard because borrowers will be able to challenge compliance with far fewer time restrictions, according to the American Securitization Forum. In a comment letter to the Consumer Financial Protection Bureau, the ASF urged the agency to set objective and clear standards for qualified mortgages – which will satisfy the ability-to-repay underwriting requirement imposed by the Dodd-Frank Act – and a legal safe harbor. “Otherwise, the resulting significant risk and costs of potential litigation will constrain investors from purchasing...

Lenders are potentially abusing reverse mortgage borrowers, according to the Consumer Financial Protection Bureau. Last week, the CFPB released a study on reverse mortgages and issued a request for information on the products along with threats of increased regulation. “In some situations the product can be misused in ways that harm borrowers,” said Richard Cordray, director of the CFPB. He noted the age of reverse mortgage applicants and lump sum payments to borrowers as particular concerns. The CFPB’s study ...

The Consumer Financial Protection Bureau expects to undertake a project to refine and integrate disclosure requirements under the Truth in Lending Act and the Real Estate Settlement Procedures Act for reverse mortgages to improve consumers’ understanding of the product. The In a recent 231-page study submitted to Congress, the CFPB said consumers are still confused about how reverse mortgages work, despite the required disclosures and industry efforts to educate the public on this type of equity-based lending. The rising-balance and falling-equity nature of reverse mortgages is particularly ....

The appraisal industry is calling upon Congress to enact legislation to reform the current regula-tory structure for appraisers, at the same time warning that any unauthorized action by appraiser regula-tory agencies to toughen oversight would hurt and jeopardize the profession. Testifying before the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity last week, the Appraisal Institute said the Appraisal Subcommittee of the Federal Financial Institutions Examination Council and the Appraisal Foundation, an authorized private regula-tory body, have agreed to...

A continued outpouring of concerned industry commentary about the Consumer Financial Protection Bureau’s pending ability-to-repay rule has prompted the bureau to hit the reset button on the public comment period, giving the mortgage lending industry another opportunity to address some limited, specific issues before the rule becomes final. During a hearing in the Senate Banking, Housing and Urban Affairs Committee, Sen. Mike Crapo, R-ID, pressed his concerns about the rule with CFPB Director Richard Cordray and questioned him about the bureau’s intentions. “The housing credit market...

The Consumer Financial Protection Bureaufs recently proposed method of extending its supervisory powers to nonbank mortgage lenders it considers potentially risky seems fairly straightforward. But look closely and several potential sinkholes emerge for such lenders, one leading attorney serving the mortgage industry suggested. Despite its outward simplicity, the proposed process presents several potential pitfalls for nonbanks, according to Eric Mitzenmacher, an associate attorney in the Washington, DC, office of the K&L Gates law firm. To begin with, the bureau does not define griskh...

The Consumer Financial Protection Bureau and the four prudential regulators have released a ¡°Memorandum of Understanding on Supervisory Coordination¡± that clarifies how they plan to coordinate their supervisory activities, consistent with the Dodd©\Frank Wall Street Reform and Consumer Protection Act. Dodd©\Frank requires the CFPB and the prudential regulators ¨C the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency and the National Credit Union Administration ¨C to synchronize important aspects of their supervision of insured...

More than 1,800 comment letters were apparently not enough. The Consumer Financial Protection Bureau reopened the comment period last week on the pending ability-to-repay rule, with an emphasis on data relating to debt-to-income ratios. The rule will define “qualified mortgages” and the Dodd-Frank Act mandates that it be finalized by January 21, 2013. Data on agency mortgages helped prompt the request for comments, and the CFPB said it is hoping for similar data on mortgages in non-agency mortgage-backed securities ...

The Consumer Financial Protection Bureau is seeking comment and information on mortgages not financed by Fannie Mae or Freddie Mac, including those insured and guaranteed by the federal government, as it reopened the public discussion for the proposed “ability to repay” rule. New data the Federal Housing Finance Agency provided to the CFPB after the close of the rulemaking’s comment period spurred the bureau to reopen the comment period until July 9, 2012. The new FHFA data track the performance of loans purchased or guaranteed by Fannie Mae and Freddie Mac from 1997 to 2011. The CFPB also has obtained data on ...