The U.S. residential MBS sector will continue its slow, steady recovery in 2016 amid a host of challenges, showing further improvement in housing fundamentals, credit quality and mortgage performance, according to analysts. The challenges to MBS structured financing boil down to the following: tapering of Federal Reserve investment in MBS, MBS supply and demand, interest rates and prepayment risk. Fitch Ratings notes...

More than two months into the Consumer Financial Protection Bureau’s integrated disclosure rule, known as TRID, many lenders apparently are still at the mercy of their technology vendors to get fully and finally up to speed. “Our members report that problems and glitches are still prevalent everywhere,” said Rodrigo Alba, senior regulatory counsel at the American Bankers Association, during a webinar this week sponsored by Inside Mortgage Finance, an affiliated publication ...

Congress looks poised to enact its second piece of legislation involving the two government-sponsored enterprises that have been in conservatorship for over seven years. Lawmakers included the “Jumpstart GSE Reform Act” in a fiscal 2016 omnibus spending bill that is expected to be approved late this week. The first piece of GSE legislation enacted by Congress affected just two people, rolling back pay raises awarded to the CEOs of Fannie Mae and Freddie Mac early in 2015. The “Jumpstart” language is more daring by barring the Treasury Department from doing something it has no intention of doing: selling its preferred stock in the GSEs without Congressional approval. The original Jumpstart legislation, sponsored by Sens. Bob Corker, R-TN, Mark Warner, D-VA, and Elizabeth Warren, D-MA, also would have blocked...

The second month of operations under the new integrated disclosure rule showed some divergence in closing trends for home-purchase mortgage financing compared with all-cash transactions. In November, there was an increase in the share of purchase mortgages that missed their scheduled closing dates and a slight increase in closing times compared with October, according to the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Some real estate agents responding to the survey pointed...

Seven years to the day after the Federal Reserve began its so-called ZIRP – or zero interest rate policy – the Fed’s Open Market Committee, as widely expected, finally voted this week to begin raising interest rates, opting for a modest 25 basis point rise in the federal funds rate. “This action marks the end of an extraordinary seven-year period during which the federal funds rate was held near zero to support the recovery of the economy from the worst financial crisis and recession since the Great Depression,” said Fed chief Janet Yellen. “It also recognizes the considerable progress that has been made toward restoring jobs, raising incomes and easing the economic hardship of millions of Americans. And it reflects the committee’s confidence that the economy will continue to strengthen.” However, the Fed also implied...

Don’t believe press accounts that the Consumer Financial Protection Bureau’s integrated disclosure rule isn’t causing headaches throughout the mortgage lending industry, top industry representatives said this week. The good news for lenders is: It’s not just your shop that is having problems. Experts detailed the ongoing industry compliance problems with the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Integrated Disclosure Act rule – the so-called TRID rule – during a webinar this week sponsored by Inside Mortgage Finance. “Surely, the rule is...

There is limited good news to report for lenders in terms of industry efforts to secure regulatory relief from a variety of rules from the CFPB. Among the good news is that the transportation funding legislation that President Obama is expected to sign shortly includes language that will grant the CFPB greater flexibility to treat a balloon loan as a “qualified mortgage” if it was extended by a community bank or creditor operating in rural or underserved areas. Other language will institute a process for banks and other stakeholders to petition the bureau to designate an area as “rural” or “underserved” for the purposes of the CFPB’s ability-to-repay rule. Another provision will expand the bureau’s ability to exempt creditors serving ...

New information provided to Moody’s Investors Service suggests nearly every lender reviewed in a limited sample has violated the CFPB’s so-called TRID, the Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, at the start of the implementation period, which began Oct. 3, 2015. “Several third-party review (TPR) firms have revealed to us that their reviews of more than 90 percent of the first pipeline of residential mortgage loans subject to the CFPB’s recently enacted TRID had TRID compliance violations, although many of them were only technical in nature,” said Moody’s in a new credit outlook. “These results suggest that some lenders are having difficulty complying with the rules, a credit negative because it increases the likelihood that ...

The CFPB’s new Home Mortgage Disclosure Act (Regulation C) final rule is likely to increase costs for the mortgage industry – and by extension, homebuyers – while raising the stakes for lenders on the compliance front, according to a recent analysis by attorneys with the Morrison & Foerster law firm.“Among the largest costs of the new Regulation C will be necessary updates to data-collection systems, including integration of those systems with application, underwriting, disclosure, origination, and purchased-loan intake platforms, as applicable,” said the attorneys. In addition, HMDA compliance management will take on a whole new significance. “The need for monitoring and controls tied to new HMDA protocols is a few years off, but the preparation curve promises to be steep,” they ...

Sage Bank, a Lowell, MA-based financial institution with less than $200 million in assets, will pay $1.18 million to settle allegations brought by the U.S. Department of Justice that it violated the Fair Housing Act and the Equal Credit Opportunity Act by discriminating in the pricing of its mortgage loans to African-American and Hispanic borrowers. The government accused Sage Bank of charging African-American and Hispanic borrowers higher prices for residential mortgages than similarly situated white borrowers for reasons that had nothing to do with their creditworthiness. “Specifically, under Sage Bank’s pricing policy, each of its loan officers was assigned a target price, which was the price a loan officer was required to achieve on each home loan, regardless of a ...