Federal regulators suggest that a number of changes are under consideration for risk-retention requirements initially proposed in 2011. Two changes under consideration include a revision of the qualified residential mortgage definition and a possible alternative to the controversial proposed premium capture cash reserve account. Katherine Hsu, chief of the office of structured finance in the division of corporation finance at the Securities and Exchange Commission, said federal regulators are considering changing the proposed definition for QRMs due to the recent ability-to-repay rule from the Consumer Financial Protection Bureau that set requirements for “qualified mortgages.” The QRM standards cannot be any more broad than the QM standards. Speaking at the American Securitization Forum’s ASF 2013 conference last week in Las Vegas, Hsu also stressed...

The Consumer Financial Protection Bureau’s ability to regulate nonbanks, particularly servicers, appears to be questionable due to a recent court ruling on President Obama’s use of “recess appointments.” The questions regarding the CFPB’s authority have been prompted by the U.S. Court of Appeals for the District of Columbia, which recently declared President Obama’s recess appointments to the National Labor Relations Board to be unconstitutional because the Senate was not technically ...

Responding to industry concerns over the impact of the new loan officer compensation final rule on reverse mortgages, the Consumer Financial Protection Bureau has clarified the phrase “amount of credit extended” for closed-end Home Equity Conversion Mortgage loans. For closed-end reverse mortgages, a loan originator’s compensation may be based on either (a) the maximum proceeds available to the consumer under the loan; (b) the maximum claim amount (if the loan is subject to the Department of Housing and Urban Development’s HECM rules); or (c) the appraised value of the property, as determined by ...

The government-sponsored enterprises are working several different risk-transfer pilots and will soon issue the securities, according to officials at the Federal Housing Finance Agency, Fannie Mae and Freddie Mac. Non-agency MBS investors appear eager for the securities, though a number of regulatory concerns remain, including complications with the Commodity Futures Trading Commission. Patrick Lawler, chief economist at the FHFA, said a risk-sharing transaction will hopefully be issued in the “not too distant future.” Speaking at the American Securitization Forum’s ASF 2013 conference this week in Las Vegas, Lawler and other officials with the FHFA and GSEs said risk-sharing transactions are a high priority this year. “The commitment is...

The American Bankers Insurance Association is calling upon the CFPB to reconsider the "force-placed" insurance notice provisions in the bureau's newly issued mortgage servicing rules, arguing they go beyond what the Dodd-Frank Act intended, could disrupt the market in unintended ways and have a negative effect on consumers. Force-placed insurance is coverage that the servicer buys on the property when the borrower no longer has property insurance. Without such coverage, whoever holds the mortgage would be at risk if the house were to be damaged or destroyed. But often the borrower may be responsible...

The CFPB has promulgated its loan originator compensation final rule, perhaps most notable for what it didn't include. Industry groups had urged the bureau to drop from the final rule its proposed "zero-zero alternative that would have required lenders to offer a loan option with no discount points or origination fees any time they offered a mortgage with such payment features. Industry representatives said...

In a development that could inject turmoil and chaos into the CFPB’s regulatory sphere of influence, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit has declared the three recess appointments President Barack Obama made to the National Labor Relations Board early last year to be unconstitutional. The judges said the appointments were illegitimate because the Senate was not actually in recess when they were made. “Considering the text, history and structure of the Constitution, these appointments were invalid from their inception,” the ruling stated. Here’s why this is...

Lawyers involved in securitization issues said they are feeling both anxiety and relief regarding regulatory issues in 2013. The feelings have been prompted by the Dodd-Frank Act with the greatest looming issue being risk-retention requirements. “To say that there is a lot of anxiety with this rule cannot be overstated and I really think it’s an impediment to some asset classes really getting traction in 2013, particularly mortgages,” Jon Van Gorp, a partner at the law firm of Mayer Brown, said on an outlook conference call late last week. “No one knows...

Federal regulators approved a final rule last week to set new appraisal requirements for higher-priced mortgage loans. The requirements include a complete exemption for “qualified mortgages” and certain other originations. Comptroller of the Currency Thomas Curry said the rule, along with the CFPB’s recent ability-to-repay rule, are key components in addressing the “worst economic practices since the Great Depression.” The final rule requires lenders originating HPMLs to obtain ...

Can a lender rely on an approval from the FHA’s automated underwriting system in determining whether a mortgage loan is a “qualified mortgage?” Lawyers at BuckleySandler, a Washington, DC, law firm, indicated some uncertainty after poring over the Consumer Financial Protection Bureau’s final “ability-to-repay” rule governing residential mortgage lending under new Truth in Lending Act regulations. Effective on Jan. 10, 2014, the final rule requires lenders to verify a borrower’s financial information and determine the borrower’s capacity to repay the loan over the long term. It also creates a ...