The Ninth Circuit Court of Appeals agreed with the CFPB on its interpretation of the Real Estate Settlement Procedures Act, but refused to “give deference” to the amicus brief in which the bureau’s argument was presented. “Here, CFPB is interpreting the statute, not the regulation. An agency’s interpretation of the statute – when presented in an amicus brief – is not promulgated in the exercise of its formal rulemaking authority, so no … deference is warranted,” ruled the court. Further, even if certain terms in the statute also appear in the regulation, the CFPB “is in fact interpreting Congress’s words in the statute, so we give no deference to CFPB’s interpretation,” the court said. “In addition, because the statutory terms at issue ...

Members of the U.S. Senate and House of Representatives are returning to Washington, DC, this week, after their August recess concluded with the Labor Day holiday weekend. That means mortgage industry officials have less than one month to convince Congress and the Obama administration to sign off on regulatory relief from the CFPB’s pending TILA-RESPA Integrated Disclosure (TRID) rule, which kicks in Oct. 3, 2015. Last week, the Mortgage Bankers Association began a grass-roots lobbying campaign urging its members to get in touch with their respective members of Congress to support legislation that would establish a temporary enforcement grace period and legal safe harbor under the TRID. “A temporary legal safe harbor for lenders will ensure the new requirements are ...

The requirements associated with the CFPB’s pending TILA/RESPA Integrated Disclosure (TRID) rule will likely prompt a majority of Realtors to alter their purchase contracts, according to the results of a new survey from the National Association of Realtors. “When asked about their plans to deal with the new TRID rules, 55.9 percent of Realtors plan to change their purchase agreements to reflect a longer timeline, while 31.2 percent will add contingencies to the contract,” the survey said. Also, 37.0 percent of respondents indicated they have put together plans with their lender or title company to help even out the process, while a significant share plan to perform final inspections earlier (32.5 percent) or will provide contracts and amendments to the ...

FDIC Official Calls for Broader QM Parameters. Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig recently came out in support of congressional legislation to expand the kinds of loans that can be deemed qualified mortgages under the CFPB’s ability-to-repay rule. However, with Congress coming back from its annual August recess this week, the biggest hurdle facing such measures may be whether lawmakers feel enough urgency to act by year’s end. Among other provisions, Hoenig called for mortgages held in portfolios of certain banks to be defined as QMs and receive the protections established by the bureau for such mortgages. To qualify, under Hoenig’s proposal, banks would have to be “more traditional” institutions that emphasize the core commercial banking model and ...

M&T Bank Settles Allegations It Used ‘Neighborhood Racial Criteria’ for Mortgage Product. A court approved M&T Bank's settlement with the Fair Housing Justice Center under which the Buffalo, NY-based bank will pay $485,000 while agreeing to revise its residential origination policies. The nonprofit FHJC filed a lawsuit in February after investigating the bank’s “Get Started Program.” The mortgage product is aimed at homes in “majority minority” neighborhoods or in low- or moderate-income areas. The product is for first-time homebuyers and it allows for low downpayments and the ability to finance closing costs. The FHJC found that M&T loan officers discriminated against potential borrowers based on race and national origin, alleging violations of the Fair Housing Act. Among other issues, minority ...

Angel Oak Mortgage Solutions in Atlanta hopes to price its first-ever nonprime MBS sometime next week – a $150 million bond issued through Nomura Securities, a top Angel Oak executive told Inside MBS & ABS. Mike Fierman, managing partner and CEO of Angel Oak Companies, an affiliate of the lender, said officials have been on an investor road show the past week or so, crisscrossing the country. “Investors love...

Bond and MBS prices held steady this week, but market watchers expect that volatility, in general, will persist on pricing until the Federal Open Market Committee meets later in the month to discuss the fate of short-term interest rates. Deutsche Bank, among others, predicts that the FOMC will call for a rate hike then, but it isn’t entirely certain given China’s financial problems. If China continues to crater, the Fed could hold off. Others are predicting...

Legacy-era non-agency MBS litigation continues to be a ripe field of opportunity for U.S. regulators and industry attorneys alike, years after the financial crisis and Great Recession ended, thanks to some key recent judicial rulings. Late last month, Judge Alvin Thompson of the U.S. District Court for the District of Connecticut gave the green light to the Federal Housing Finance Agency to continue to pursue its claims against the Royal Bank of Scotland. The regulator for Fannie Mae and Freddie Mac alleged that RBS provided misleading statements related to $32.1 billion in RMBS the bank sold to the two government-sponsored enterprises between 2005 and 2008. The thrust of the FHFA’s complaint is...

Federal regulators have implemented a number of rules in recent years aimed at moving banks away from a reliance on credit ratings when making investing decisions. Officials at the Federal Deposit Insurance Corp. stress that if a bank’s management doesn’t have comprehensive understanding regarding a security, the bank shouldn’t invest in the MBS or ABS. “The gist of these new requirements is simple: banks should understand the risks associated with the securities they buy and should have reasonable assurance of receiving scheduled payments of principal and interest,” said Robert Hendricks, capital markets policy analyst at the FDIC. In an FDIC report, Hendricks provided...

Members of Congress from both sides of the aisle – and even some regulators – are pushing for legislation to broaden the types of loans that receive protections allotted to qualified mortgages. A number of issues remain in flux, including how widely the expanded QM definition would be applied and whether there is enough urgency to pass a bill before the end of the year. Last week, Thomas Hoenig, vice chairman of the Federal Deposit Insurance Corp., detailed ...