The Consumer Financial Protection Bureau late last week said it will take a close look at mortgage brokers acting as mini-correspondents, particularly if they are just trying to get around disclosure requirements and limits on broker compensation. The CFPB is concerned that some mortgage brokers are claiming to be mini-correspondent lenders by establishing warehouse funding lines when they are still essentially just facilitating a transaction between a borrower and a lender. “While some brokers may be setting up such arrangements because they intend to grow into full correspondent lenders, the bureau is concerned...

Redwood Trust took three months off from issuing jumbo MBS but came back with something of a doozy this week: a $306.05 million deal that will include some loans that don’t meet standards for qualified mortgages and some loans that weren’t subject to third-party due diligence reviews. Sequoia Mortgage Trust 2014-2 is set to receive AAA ratings with credit enhancement of 7.75 percent on the top-rated tranche. While the credit enhancement requirements are somewhat high, a jumbo MBS from Redwood in November had even higher credit enhancement levels, suggesting that the non-QMs and lack of full due diligence aren’t a major concern. Only three of the 438 mortgages to be included in the deal are...

The Federal Reserve has released action plans for Goldman Sachs and Morgan Stanley to correct deficiencies in the firms’ risk management procedures for third-party mortgage servicers. The plans were a requirement under enforcement actions issued by the Fed and the Office of the Comptroller of the Currency between April 2011 and April 2012 against 16 mortgage servicers, including Goldman Sachs and Morgan Stanley. The servicers came under scrutiny for deficient servicing practices and foreclosure procedures, and later settled with the government. Morgan Stanley’s regulatory action plan supplements...

Real estate investment trusts that have been gobbling up MBS the past few years – and paying hefty dividends in the process – may have some more room to run, especially if interest rates remain relatively benign. “Given the tailwinds of lower prepayment speeds and Fed purchases, we believe that payout levels should remain stable in the near term,” said one veteran analyst who works for a top five bank. This analyst, who tracks several large REITs that invest in agency securities, added...

The Securities Industry and Financial Markets Association has called upon federal financial institutions and consumer protection regulators to form an interagency working group to establish joint, uniform diversity standards for the financial services industry. The standards would implement a requirement of the Dodd-Frank Act for consistent, uniform rules to assess the diversity policies and practices of financial institutions. The rules would also spell out criteria and procedures for determining whether a contractor or subcontractor has made a “good-faith effort” to include minorities and women in its workforce. Several of the agencies jointly proposed...

The next gold rush in the mortgage industry may be home loans that fall outside the legal safe harbor for qualified mortgages under new rules that took effect in January. And like any bonanza, it’s hard to tell how big the mother lode is. According to Deutsche Bank Securities, it could be a staggering $600 billion a year, but that estimate comes with a lot of caveats. For starters, Deutsche Bank estimated that about $52 billion of 2013 mortgage originations were ...

Mortgage wholesalers are being extra careful these days on how much they pay loan brokers in a table-funding transaction to make sure they don’t run afoul of the points-and-fees cap on qualified mortgages set by the Consumer Financial Protection Bureau. According to interviews conducted by Inside Mortgage Finance over the past few weeks, table funders are capping those fees at anywhere from 2.20 percent to 2.75 percent. Some may go as low as 1.40 percent. The cap for qualified mortgage eligibility set by the CFPB under the Dodd-Frank Act is...

A number of consumer advocates strongly oppose a proposal from the Consumer Financial Protection Bureau that would allow lenders to cure mistakes regarding debt-to-income ratios on qualified mortgages. Lenders calling for the DTI ratio right-to-cure on QMs are making “Chicken Little” claims to support their arguments, according to the National Consumer Law Center and the National Association of Consumer Advocates. In April, the CFPB requested...

Consumer complaints to the CFPB continued their quarter-by-quarter rise and fall, but one strong message from second quarter data is that financial services providers of all types saw a big improvement in the sheer volume of gripes, a new analysis by Inside the CFPB found. Overall, criticisms fell by 14.8 percent in the second quarter compared to the first quarter. Of the eight categories of consumer criticisms we track, seven saw double-digit improvements in 2Q14, ranging from an 11.3 percent drop related to bank accounts, to an 18.5 percent fall having to do with home mortgages. The sole category that saw an increase in the period ended June 30, 2014, was money transfers, which saw a rise of a scant [with 3 charts] ...

The National Association of Mortgage Brokers is doing another survey of its membership to determine the amount of closing cost credits given back to consumers at closing during 2013 – part of a broader effort on the part of the trade group to persuade the CFPB to loosen aspects of its ability-to-repay rule. Last year, NAMB submitted a letter to the CFPB to detail the mandatory credits a broker is required to provide consumers when rate sheet pricing exceeds the broker’s contractually obligated Lender Paid Compensation agreement. NAMB contends that the mortgage broker community provides mortgage credits back to the consumer that range in the billions annually, thus stimulating the nation’s economy. In order to demonstrate this, NAMB polled a number ...