The long-awaited correction in MBS prices was put on hold this week with the news that the Federal Reserve isn’t ready to hike interest rates anytime soon. Moreover, now there’s a growing belief among some economists and mortgage market watchers that the central bank may not raise interest rates at all this year. And there’s even a school of thought that suggests the yield on the benchmark 10-year Treasury bond might hit 1.0 percent before it reaches 2.0 percent. As Inside MBS & ABS went to press this week, the 10-year was...

A proposed rule issued by the Federal Reserve in March could increase costs and reduce securitization activities, according to industry participants. The Fed’s proposed single-counterparty credit limits for large banking organizations were required by the Dodd-Frank Act. The Fed proposed single-counterparty credit limits for domestic and foreign bank holding companies with $50.0 billion or more in total consolidated assets. The Fed first issued...

The mortgage industry and secondary-market investors continue to struggle with uncertainty over the degree of liability for errors in complying with the Consumer Financial Protection Bureau’s integrated-disclosure rule, commonly known as TRID. Many hope the pending TRID 2.0 rulemaking expected from the CFPB this July will clarify and resolve the exasperating ambiguity and at least let industry participants and investors know exactly where they stand and what risks they are taking on. One of the most important areas for investors is contractual liability. “Under most mortgage loan purchase agreements, there is a representation and warranty for absolute compliance [or] a signed agreement saying that you’re only liable for material violations,” said Richard Horn, a Washington, DC, attorney. Speaking at this week’s American Bankers Association conference, the former CFPB official said, “But whatever the agreement, you still have contractual liability for the loans that you sell, so keep that in mind.” Civil liability is...

FHA lenders will face stiffer maximum monetary penalties later this year for various violations of agency rules and regulations. The higher monetary penalties are the result of legislation signed into law late last year requiring federal agencies to adjust the current maximum penalty amounts for inflation in order to maintain their deterrent effect. Specifically, the Federal Civil Penalties Inflation Adjustment Act of 2015 (2015 Act) requires federal agencies to adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rule and subsequent annual adjustments for inflation. The interim final rules with the initial penalty adjustments must be published by July 1, 2016. The new penalty levels must take effect no later than Aug. 1, 2016. Additionally, agencies are required to make annual inflation adjustments, starting Jan. 15, 2017, and for each year going forward. The adjustments will ...

FHA Revises TOTAL Mortgage Scorecard. Effective on June 11, 2016, the FHA’s TOTAL Mortgage Scorecard no longer returns either upfront or annual mortgage insurance premium factors to an automated underwriting system. The FHA directs lenders to consult Appendix I of its Single Family Housing Policy handbook for applicable MIP factors. AUS vendors have been notified of the change and have adjusted their systems accordingly. HUD, First Citizens Bank Settle Fair Lending Complaint. A South Carolina bank has agreed to correct its lending practices and allocate funding to resolve allegations that it denied more loans to minorities compared to similarly-situated white loan applicants. The settlement agreement stemmed from a complaint filed by the Department of Housing and Urban Development against First Citizens Bank and Trust Co. in 2011 after an analysis of ...

The supply of single-family home loan debt in early 2016 grew for the fourth consecutive quarter to hit $10.008 trillion, its highest level in three and a half years, according to Federal Reserve data released late last week. The first-quarter gain was a modest 0.2 percent from the end of last year, and a 1.5 percent increase from March 2015. But the servicing market is a slow-changing glacier, and steady increases over the past year are another indicator that the mortgage market has largely recovered from the housing recession. Most of the gain came...[Includes two data tables]

Mortgage lending industry representatives were told to keep their expectations in check when it comes to the forthcoming TRID integrated-disclosure rulemaking from the Consumer Financial Protection Bureau, which is expected sometime this summer, perhaps as early as late July. “Everybody in the industry cheered when the bureau announced this,” attorney Richard Horn, the former CFPB official who led the development of the TRID rule, said this week during a panel discussion at the American Bankers Association’s regulatory compliance conference in San Diego. “I think...

The Consumer Financial Protection Bureau plans to develop another rule to resolve some of the mortgage industry’s problems with the CFPB’s integrated disclosure rule may provide some psychological relief for lenders. But it’s certainly not solving any of the problems they are struggling with right now, problems that continue to emerge as the months since implementation roll on. Among the host of concerns that have sprung up related to the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule – TRID – is the raft of issues having to do with settlement agents. Delivering a presentation at the American Bankers Association’s regulatory compliance conference this week, Richard Horn, a former CFPB official, said...

Two appraiser trade groups raised concerns this week that federal banking regulators are re-interpreting longstanding policy to exempt most of the mortgage market from appraisal rules. The American Society of Appraisers and the National Association of Independent Fee Appraisers published a white paper and wrote to leaders in Congress detailing positions taken by federal regulators regarding the application of appraisal standards included in the Financial Institutions Reform, Recovery and Enforcement Act. Federal regulators are...

In a letter sent to CFPB Director Richard Cordray, the National Association of Realtors asked the agency to clarify that mortgage originators can share the closing disclosure (CD) form with third parties “if the lender receives a consent form from the consumer.” The trade group noted that, before the TRID rule was implemented, real estate agents aided their clients by answering questions about the HUD-1 and by reviewing terms agreed to in the sales contract, such as concessions, escrows, commissions and shares of prorated taxes.