TRID-related mortgage defects dropped slightly during the second quarter of 2016, the first decline since the rule kicked in Oct. 3, 2015, ARMCO, a risk management technology vendor, said in a new quality control analysis. “TRID-related defects continue to be the leading area of concern in post-closing reviews; however, corrective action planning taken by the lending community has produced positive results that can now be visualized in the 2Q data,” said Phil McCall, chief operating officer at the company. According to the report, the overall critical defect rate dropped to 1.63 percent for the period ending June 30, 2016, the most recent period for which relevant data were available, thus ending the upward swing that stretched back to 3Q15. The ...

Mortgage programs that use less than 24 months of bank statements to verify a borrower’s ability to repay back a loan are riskier than more traditional mortgages and may be prone to running afoul of the CFPB’s ATR rule, according to a new report from Moody’s Investors Service. “Although longer-term bank statement programs would likely satisfy the CFPB’s ATR rule, short-term programs may not,” analysts at Moody’s said. “To fully understand cashflow patterns typical of the borrower’s line of work, the longer the track record, the better,” they added. “The fewer statements a program requires, the higher the likelihood for inconsistencies in the calculation of available income from loan-to-loan.” Under the ATR rule, as Moody’s noted, the originator is required ...

CFPB Issues Small Entity Compliance Guide for Its Mortgage Servicing Final Rule. The Consumer Financial Protection Bureau has published an updated version of its Small Entity Compliance Guide for its 2016 mortgage servicing final rule, incorporating amendments made to mortgage servicing provisions in Regulation X and Regulation Z. ... Bureau, Other Regulators, Hold Exemption Threshold for Appraisals for Higher-Priced Mortgage Loans Steady. The CFPB, the Federal Reserve and the Office of the Comptroller of the Currency decided to maintain at $25,500 the exemption threshold for appraisals for higher-priced mortgage loans under the Truth in Lending Act (Regulation Z). ...

The supply of outstanding single-family MBS grew by 1.0 percent during the third quarter of 2016, with strong demand from several key investor groups soaking up new issuance, according to a new analysis by Inside MBS & ABS. The agency MBS market grew by 1.4 percent from the end of June, reaching $5.948 trillion. Ginnie Mae continued to be the fastest-growing program, with total MBS outstanding climbing 2.2 percent during the third quarter to $1.631 trillion. Fannie Mae saw...[Includes two data tables]

Risk-sharing transactions from Fannie Mae and Freddie Mac have delivered strong returns for investors in the past year, but that could change under the monetary policies of the Trump administration, according to analysts at Bank of America Merrill Lynch. The analysts recently dialed down their recommendation on the risk-sharing transactions issued by the two government-sponsored enterprises to “underweight.” “Trump’s victory paves...

New non-agency MBS issued in 2017 will likely include more diversified collateral and feature some structural changes, analysts at Moody’s Investors Service said in a new report this week. The rating service projected that non-agency prime jumbo volume will remain steady in 2017, while issuers will continue to explore non-traditional asset types, such as re-performing and non-performing loans, reverse mortgages, non-qualified mortgages and nonprime transactions. “Although prime jumbo deals will start to include loans with slightly lower FICOs and higher loan-to-value ratios than those loans included in 2016 transactions, collateral quality will remain...

With November’s election potentially unraveling key features of the financial regulatory structure instituted over the past eight years, experts say it’s time for policymakers to figure out what’s working and what needs to be fixed. During a panel session hosted by the Bipartisan Policy Center, Richard Berner, director of the Office of Financial Research, said that more information is needed about liquidity because a lack of it is often cited as one of the unintended consequences of regulation. “Market liquidity is...

Defects in mortgage loans produced under the Consumer Financial Protection Bureau’s integrated disclosure rule fell modestly in the second quarter of 2016, after peaking in the first three months of the year. This is the first such drop since the TRID rule took effect in October 2015, according to a new quality control analysis from ARMCO, a risk management technology vendor. “TRID-related defects continue to be the leading area of concern in post-closing reviews; however ...

Comments made by Treasury Secretary Designate Steven Mnuchin about privatizing Fannie Mae and Freddie Mac caused much speculation around Washington last week. But analysts predict that privatization in the near term is unlikely. Mnuchin criticized the fact that the GSEs have been in conservatorship this long. During a cable television interview he said, “We’ve got to get Fannie and Freddie out of government ownership,” adding that it often displaces private lending in the mortgage markets. “So let me just be clear. We’ll make sure that when they’re restructured they’ll be safer and they won’t get taken over again, but we’ve got to get them out of government control.”

Although the common stock of Fannie Mae and Freddie Mac has been deemed near worthless by stock analysts (and others), the share price of the two has been on a tear of late thanks to comments made two weeks ago by investment banker Steven Mnuchin, President-elect Donald Trump’s pick to head the Treasury Department. As Inside The GSEs went to press this week, Fannie common was trading at just $4.00 a share, Freddie at $3.90. And while that might not seem like much, it represents a stunning 166 percent gain since right before the November election. Mnuchin set the stocks in orbit when he said during a cable TV interview that resolving...