The concerns among participants in the jumbo MBS market regarding the TILA-RESPA Integrated Disclosure rule might have been much ado about nothing. A new report from Moody’s Investors Service suggests that TRID violations won’t materially increase losses in jumbo MBS. The rating service said third-party due diligence reviews will identify loans in violation of TRID, and lenders and aggregators will be able to cure many TRID violations before the mortgages are placed in jumbo MBS. Three jumbo MBS have included...

Some lenders are generating extra revenue by providing a valuable service to real estate agents: providing leads on potential homebuyers. Real estate agents report mixed feelings about the services offered by Quicken Loans and others, according to a recent survey conducted by Campbell Surveys and sponsored by Inside Mortgage Finance. Interactions between lenders and real estate agents typically relate to homebuyer referrals by agents to lenders. However, some lenders also sell homebuyer leads to real estate agents. “There is...

Warehouse lenders that supply credit to nonbank originators have seen usage rates and new line requests increase significantly in the past few weeks, thanks in part to plunging interest rates brought about by the “Brexit” vote. David Frase, president of warehouse lending for Southwest Bank, said, “Any warehouse bank that isn’t seeing record volume is probably malfunctioning in some way. We’ve been pretty darn busy.” Other warehouse managers have reported...

Mortgage lenders’ compliance personnel not only need to help their companies navigate all of the external regulations and laws imposed by federal and state policymakers, they also face challenges internally from representatives of various business lines in their own shops that inadvertently complicate their mission as professionals – particularly when it comes to loan originator compensation issues. “Dodging the land mines. That’s really how I think about this as a practitioner,” Loretta Salzano, founding partner at the Franzén and Salzano law firm in suburban Atlanta, said during a presentation at the American Bankers Association’s regulatory compliance conference, held last month in San Diego. She elaborated...

The Federal Housing Finance Agency this week revealed estimates of how much it costs Fannie Mae and Freddie Mac to issue their popular credit-risk transfer debt notes, as well as more information on the kinds of investors that have been buying them. In addition to a report on the existing credit-risk transfer activities of the two government-sponsored enterprises, the FHFA also formally soliciting input on further development of the program, including the ongoing interest in so-called front-end CRT options. The FHFA’s cost estimates referred...

At the recent invitation-only Ginnie Mae “liquidity summit” in Washington, DC, some of the nation’s top regulators – including one from the Federal Reserve – expressed their concerns about the growing market share of nonbank issuers and servicers. The focus, as might be expected, centered on the capital position of nonbanks, which pales in comparison to depositories. As one attendee told Inside MBS & ABS: “It was all about bashing the nonbanks.” This attendee, who spoke under the condition his name not be used, said...

Pleas from the securitization industry for the Supreme Court of the United States to hear an appeal of Midland Funding v. Madden were rejected this week, prolonging uncertainty in sectors of the secondary market. SCOTUS may still consider the issue at some point going forward, according to analysts, providing hope for the industry. Richard Johns, executive director of the Structured Finance Industry Group, said the denial of certiorari for Madden will result in significant challenges for borrowers of credit cards, mortgages, auto loans and other financial products. “The injection of uncertainty into the credit markets will ultimately increase the cost of credit for all and directly impact the real economy,” he said. The Madden case involved...

Fitch Ratings published updated criteria this week for rating residential MBS. The new criteria include adjustments to due diligence grades relating to the Truth in Lending Act/Real Estate Settlement Procedures Act disclosure rule and evaluations of firms serving as a deal agent. Fitch said the new criteria include a “realignment” of items that prompt C grades and D grades on mortgages reviewed by third-party due diligence firms. The changes incorporate the Structured Finance Industry Group’s recently issued RMBS 3.0 TRID Compliance Review. The rating service acknowledged...

Mortgage bankers that trade in the to-be-announced MBS market will be exempt from the initial margin requirements associated with the Financial Industry Regulatory Authority’s revised Rule 4210, which was approved by an order of the Securities and Exchange Commission last week. Under the rule, as amended now three times by FINRA, market participants who trade TBAs will have to post an initial “maintenance” margin of 2 percent of net position size, along with an on-going variation margin, which will be subject to a $250,000 minimum transfer amount. However, the SEC order provided...

Several more court documents were released over the past week that offer additional details into the circumstances surrounding the Treasury Department’s decision to replace the quarterly dividend Fannie Mae and Freddie Mac had been paying in conservatorship with a net worth sweep. Industry observers say the new memos and deposition transcripts reinforce the notion that the government had been planning the sweep for a while before it was implemented in late 2012. The government-sponsored enterprises’ shareholders have been challenging...