Treasury Secretary Steven Mnuchin made it clear after being nominated that resolving the conservatorships of Fannie Mae and Freddie Mac would be a top priority for his department. And although Mnuchin will clearly be a player in the debate, the policy “ax” on the issue will be Craig Phillips, recently tapped to serve as counselor with an agenda that includes fixing the two government-sponsored enterprises. Most mortgage professionals have applauded President Trump’s pick of Mnuchin and now Phillips. Mnuchin was the former head of Goldman Sachs’ MBS department, and Phillips was a former managing director of Morgan Stanley’s fixed-income division. Phillips was...

The mortgage market has paid close attention to a lawsuit brought by PHH Mortgage that challenges the constitutionality of the Consumer Financial Protection Bureau, and the Trump administration’s recent move to side with the mortgage lender. Now, the Treasury Department is making a similar argument that the structure of the Federal Housing Finance Agency is also unconstitutional. Both the CFPB and FHFA, the regulator of Fannie Mae and Freddie Mac, are independent agencies led by a single director whom the president can only fire for cause. In an advisory filed March 24, the Treasury backed...

There was little change in the amount of agency MBS held by the Federal Reserve in 2016 compared to the previous year, although the account generated a whopping $46.3 billion in net interest income last year. The 2016 net interest gains from Fannie Mae, Freddie Mac and Ginnie Mae MBS were down slightly from 2015, when the Fed reported $49.0 billion, according to an independent annual audit of the Fed. Conducted by KPMG, the audit estimated...

A proposal in Congress to define all mortgages held in portfolio as qualified mortgages has some bipartisan support, but lenders are divided on the matter. “I caution the use of portfolios to add loans that are not standard,” said David Motley, president of Colonial Companies and chairman-elect of the Mortgage Bankers Association. “The rules of the qualified mortgage, I believe, should be the same for everybody.” He made the remarks this week at a hearing by the ...

As the clock ticks down on Fannie Mae and Freddie Mac running out of a capital buffer in early 2018, there is a growing belief in the mortgage industry that the Federal Housing Finance Agency will move to change dividends payments by the two from a quarterly to an annual basis. If the FHFA pulls the trigger, it would allow the government-sponsored enterprises to sit on a pile of cash before upstreaming it to Treasury – money that would give them a buffer if rates turn the wrong way and a hedging loss ensues in a given quarter. Ron Haynie, senior vice president of mortgage policy at the Independent Community Bankers of America, told...

Since 2012 Fannie Mae and Freddie Mac have provided the government with a hefty amount of funds thanks to the Treasury sweep of GSE profits, which could be a perverse disincentive to move forward on housing finance reform. The two government-sponsored enterprises expected to pass along a combined $9.97 billion during the first quarter of 2017, the net profits they earned in the fourth quarter that exceeded the $600 million cap on retained capital. That brings...

With House Republicans set to resume work on legislation to overhaul provisions in the Dodd-Frank Act, mortgage lenders testified at a hearing this week calling for changes to standards for qualified mortgages. “As a result of some of the constraints in the QM definition, many borrowers who should qualify for a QM are unable to access safe, sustainable and affordable mortgage credit,” said David Motley, president of Colonial Companies and chairman-elect of the Mortgage Bankers Association. He made the comments at a hearing by the House Financial Services Subcommittee on Financial Institutions and Consumer Credit. The MBA urged...

As different as the presidential administrations of Barack Obama and Donald Trump may appear, one thing they have in common is an apparent unwillingness to get into the statutory weeds when it comes to the interpretation and enforcement of the Real Estate Settlement Procedures Act. Earlier this month, the Department of Justice under the Trump administration, just as it had under the Obama administration, side-stepped the RESPA issues associated with the long-running battle between PHH Mortgage and the CFPB.In its amicus brief with the U.S. Court of Appeals for the District of Columbia Circuit, the government said simply: “The United States takes no position on the statutory issues in this case….” For the Trump administration, the case comes down ...

With the industry still waiting for resolution of PHH Corp. v. CFPB and the interpretation and enforcement of the Real Estate Settlement Procedures Act at stake, political partisans on Capitol Hill last week addressed the constitutionality of the CFPB, or the supposed lack thereof, with Republicans on the offense and Democrats on defense. During a hearing last week before the House Financial Services Subcommittee on Oversight and Investigations, Rep. Trey Hollingsworth, R-IN, asked former U.S. Solicitor General Theodore Olson, now a partner with the Gibson, Dunn & Crutcher law firm, what steps would need to be taken to make the CFPB truly constitutional in its governmental function. Olson, who is representing PHH Corp. in its struggle with the bureau but ...

The CFPB has fined Nationstar Mortgage $1.75 million for allegedly violating the Home Mortgage Disclosure Act by “consistently failing to report accurate data about mortgage transactions for 2012 through 2014,” the agency said. The CFPB said it found that Nationstar’s HMDA compliance systems were flawed and generated mortgage lending data with significant, preventable errors. “Nationstar also failed to maintain detailed HMDA data collection and validation procedures, and failed to implement adequate compliance procedures,” the bureau alleged. “It also produced discrepancies by failing to consistently define data among its various lines of business.” Further, data samples reviewed by the CFPB showed substantial error rates in three consecutive reporting years, the bureau said. “In the samples reviewed, the CFPB found error rates ...