Mortgage investors and lenders alike have a number of questions about underwriting self-employed borrowers under the federal ability-to-repay rule issued by the Consumer Financial Protection Bureau. As the CFPB undertakes a mandatory review of the ATR rule and its qualified-mortgage provisions, the Structured Finance Industry Group pointed to the self-employment issue, starting with how the term is defined and the documentation required by the rule’s Appendix Q underwriting guidance. “Many times, consumers have...

In a move that would benefit the secondary market for loans made by national banks, members in the Senate and the House of Representatives recently introduced legislation to clarify that interest rates on certain loans remain unchanged after the sale or transfer of the loan. In the Senate, Democrat Mark Warner of Virginia late last week introduced S. 1642, which would amend the National Bank Act to clarify that loans which are valid when made remain valid when they’re sold, even to buyers subject to different state law. Similar language would be added to the Home Owners’ Loan Act, the Federal Credit Union Act, and the Federal Deposit Insurance Act. Joining Warner in sponsoring the bill were...

Impac Mortgage Holdings has continued to increase its production of non-qualified mortgages and plans to issue a $400.0 million mortgage-backed security collateralized by such loans, according to officials at the nonbank. Impac originated $289.60 million of non-QMs in 2016. In the first half of 2017, the nonbank had $416.70 million in non-QM volume. “We’ve seen a decrease in the conforming market and now month-over-month, we’re seeing an increase in the non-QM market ...

The private mortgage insurance industry urged the Consumer Financial Protection Bureau this week to consider including the qualified-mortgage standards of the FHA, VA and the U.S. Department of Agriculture in its assessment of the ability-to-repay/QM rule. In a comment letter, industry trade group U.S. Mortgage Insurers said it would be impossible to perform a full assessment of the ATR/QM rule without considering the different federal agency QM rules. If it does not expand the scope of its assessment, the CFPB should at least consider the impact the rules have on consumers in relation to the agency QM rules. In May, the CFPB notified stakeholders of its plan to evaluate the effectiveness of the ATR/QM rule in terms of its benefits and costs. Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which established new standards for mortgage lending, including requiring lenders to assess consumers’ ability to repay. The statute also established a class of “qualified mortgage” loans that cannot have certain risky product features and are presumed to comply with the ATR requirement.

The clock is ticking on the effective date of a host of new data collection and reporting requirements under the Home Mortgage Disclosure Act, and mortgage lenders are still waiting for the Consumer Financial Protection Bureau to complete some components of the rule necessary for full compliance. For this reason, the regulator should delay mandatory compliance much later than the scheduled January 2018 implementation date, industry trade groups said. “Although we greatly appreciate the CFPB’s work to facilitate implementation of this major data collection and reporting rule, the CFPB’s regulatory process and technological framework for this rule are still incomplete,” lender representatives said in a letter this week to the agency. Proposed amendments have not been finalized...

Fannie Mae and Freddie Mac generated a combined $4.86 billion in net income during the second quarter of 2017, down a modest 2.4 percent from the first three months of the year, according to an Inside Mortgage Finance analysis of earnings reports released this week. The two government-sponsored enterprises have racked up $9.85 billion in net income through the first six months of the year, more than double their combined earnings for the same period in 2016. In the first quarter of last year, interest rate volatility yielded significant accounting losses on their hedges, which suppressed net income at Fannie and produced a net loss at Freddie. Freddie officials said...

As the Consumer Financial Protection Bureau prepares to begin assessing its ability-to-repay/qualified mortgage rule, national representatives of the mortgage industry and other financial services participants this week urged the regulator to deal with what’s known as the “GSE patch.” The patch provides a temporary safe harbor for mortgages eligible to be sold to the government-sponsored enterprises that have debt-to-income ratios that exceed 43 percent, the maximum allowed under the ATR rule. The Housing Policy Council of the Financial Services Roundtable noted...

The CFPB plans to make some significant, but unspecified, changes to its mortgage servicing rule sometime this fall, in response to concerns raised by the industry, the bureau revealed in a blog posting about its latest semiannual rulemaking agenda, released earlier this month. The document is current as of April 1, 2017, and does not reflect the bureau’s issuance of its arbitration final rule, its assessments of its mortgage servicing rule under the Real Estate Settlement Procedures Act and its ability-to-repay rule, nor its proposed temporary increase in the institutional and transactional thresholds for home equity lines of credit. The agency said it is “considering concerns raised by industry participants regarding a few substantive aspects of the mortgage servicing rule ...

As the CFPB prepares to do the Dodd-Frank Act required assessment of its 2013 mortgage servicing rule under the Real Estate Settlement Procedures Act, one industry trade group has urged the bureau to provide servicers with more regulatory guidance and clarifications of the current rule. The Consumer Mortgage Coalition said in a letter to the regulator that it has appreciated the opportunity to work with the bureau as it developed the final servicing requirements. “However, as the CFPB is aware, the final regulatory requirements are very prescriptive, yet unclear, and sometimes conflict with other statutory or regulatory requirements,” said the CMC. “In some areas of the regulation, the CFPB misunderstood the reason for the problems it was trying to solve ...

If lawmakers and regulators are interested in bringing capital back to the private mortgage market and facilitating borrower access to credit in a responsible manner, they must make much-needed reforms to a handful of key mortgage rules promulgated by the CFPB, according to bond giant Pacific Investment Management Co. One recommended revision is eliminating the expansion of assignee liability for investors under the CFPB’s ability-to-repay rule. “Currently under the Dodd-Frank Act, mortgage investors are liable for mistakes made by lenders in the mortgage origination process for certain mortgage loans that are not deemed qualified mortgages,” said PIMCO. “Since investors have no role or discretion in the mortgage origination process, we believe this is not only nonsensical, but also has the ...