A federal appeals court in Washington, DC, ordered the transfer of a case challenging risk-retention rules to the district court because the petitioner sought review of an agency action “in the wrong court.” Writing for the majority, Judge Janice Brown of the U.S. Court of Appeals for the District of Columbia shifted the Loan Syndications and Trading Association’s (LSTA) challenge to the lower court for lack of statutory authorization to review the rule. “As it turns out, LSTA’s challenge on the merits will have to wait,” she wrote. Jointly prescribed by the Securities and Exchange Commission, Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, the credit risk-retention regulations required...

The Department of Veterans Affairs has issued additional lender guidance for dealing with the public water contamination problem in Flint, MI. The guidance expands on the agency’s minimum requirements for properties backed by VA loans. The guidance refers to policy in the VA Lender’s Handbook which requires properties to have “a continuing supply of safe and potable water for drinking and other household uses,” before being approved for a VA-backed home loan. In the VA’s view, safe and potable water also refers to water used for bathing, showering and sanitary uses. Properties not in compliance with this requirement will not be eligible for the VA guaranty. Proper mitigation of lead-contaminated water must include a central filtering system that is acceptable to local health authorities and that can provide safe and potable water. Appraisers must comment and adjust for any ...

Errors in TRID disclosures on jumbo mortgages played a key role in the recent closure of W.J. Bradley Mortgage, but the privately held nonbank may have had other problems as well, according to industry officials who claim to have intimate knowledge of the company’s operations. A thin capital base is one of those problems. An investor in the company and an investment banking official each told...

The impact of the TRID integrated-disclosure rule that took effect on Oct. 3 seems to have had little impact on Fannie Mae and Freddie Mac. For now, the government-sponsored enterprises are focused on whether sellers are using the correct forms, not whether there are mistakes. The GSEs have amended their contractual obligations with their customers to let them know that the customer is responsible for any potential or actual loss as a result of TRID violations. “So they’re basically turning what was a repurchase obligation into an indemnification obligation,” said...

The supply of home loan debt outstanding grew for a third straight quarter in late 2015, including an ongoing ride higher in un-securitized portfolio mortgages. The Federal Reserve reported that $9.986 trillion of home mortgages were outstanding at the end of last year, a 0.3 percent increase from the third quarter. The growth rate slowed a bit – the market grew by roughly twice that rate from March to September – but the fourth quarter put unpaid home mortgage debt up 1.0 percent from the end of 2014, the first annual increase since 2007. The single fastest-growing segment of the market continued...[Includes two data tables]

Late last week, secondary market officials said the CFPB has been informed about the recent failure of W.J. Bradley Mortgage of Colorado and how it was caused by jumbo loans backing up on the nonbank’s warehouse line due to errors complying with the bureau’s integrated disclosure rule. At this point, it’s hard for some industry observers and officials to gauge just how bad those errors were. However, the bigger issue may be that curing TRID errors (especially small ones) is the key to solving the current TRID-mess afflicting the residential finance industry. Some industry observers wonder whether a fix can be made that helps mortgage compliance attorneys sleep at night. Right now, the answer to that question appears to be ...

Despite efforts by certain factions of the industry to come up with legal protections regarding errors on TRID disclosures, the “scratch and dent” market for problem loans continues apace. According to Jeff Bode, CEO of Mid America Mortgage – one of the most active buyers of mortgages with TRID errors – product is still being offered on a regular basis. “Offerings have not slowed,” Bode told affiliated publication IMFnews, “though, eventually, I think it will.” On average, Mid America bids on at least eight TRID scratch-and-dent loans a day. Some lenders report they have totally adjusted to the new TRID disclosures, while others continue to be plagued by errors and delays. Meanwhile, the CFPB plans to hold an hour-long webinar on Tuesday,...

With the CFPB declining to provide any more formal guidance on legal liability for secondary market players when originators make errors in TRID mortgage disclosures, a group of due diligence firms is moving ahead with its own clarifications. High-level sources familiar with the matter who spoke under the condition of anonymity said the forthcoming clarifications have been vetted by legal counsel and are almost ready for approval. Several top third-party review/due diligence firms are involved in the effort, including Clayton Holdings and Opus. All the major rating agencies are reportedly involved as well. “We’re working to calibrate our methodology, to bring it in line with the spirit of the CFPB letter,” said one attorney close to the matter. He was ...

Independent mortgage banks and mortgage subsidiaries of chartered banks were only able to squeeze out a paltry net gain of $493 on each loan they cranked out in the fourth quarter of 2015, a fraction of the $1,238 generated in the third quarter of 2015, according to the Mortgage Bankers Association’s Quarterly Mortgage Bankers Performance Report. Proximity and correlation are not necessarily causation. But sometimes they are. In this case, TRID probably had something to do with the plunge. “Production profits dropped by over 60 percent in the fourth quarter of 2015 compared to the third quarter,” said Marina Walsh, MBA’s vice president of industry analysis. “With the Know Before You Owe (TRID) rule going into effect last Oct. 3 ...

A new survey by San Diego-based ClosingCorp of 1,000 repeat homebuyers who had purchased a home both before and after the CFPB’s integrated disclosure rule took effect found both negative and positive effects. To begin with, 64 percent of respondents said it was easier getting a mortgage under the old rules than under TRID. When it came to the amount of time it took to get and close a mortgage, 57 percent said it took longer under TRID than it did under the previous disclosure regime. Also, 51 percent of the respondents said there were more “unexpected costs, fees and surprises” in their most recent experience. On the other hand, 63 percent said that the new forms for loan estimates ...