A diverse group of mortgage lending industry representatives including Realtors, credit unions and behemoth Bank of America is more or less supportive of a possible “right to cure” a qualified mortgage loan that would inadvertently slip beyond the QM 43 percent debt-to-income ratio threshold. “We support a DTI cure that would allow creditors to take corrective action where there is an inadvertent error in calculating a consumer’s debt or income or where a creditor has stopped documenting income in the mistaken belief that sufficient validated documentation supporting the 43 percent test has been obtained,” BofA said in a public comment letter to the CFPB. According to the lender, both of these instances could easily be fixed, either by correcting a ...

Credit union industry representatives want the CFPB to expand some exemptions in some of its recent rulemakings so their CU members could reach larger portions of their targeted markets. One of the recent amendments the bureau proposed to its mortgage rules issued in 2013 would provide an alternative definition of “small provider” applicable to Internal Revenue Code Section 501(c)(3) nonprofit entities that service loans for a fee and on behalf of other nonprofit entities within the same overall organization.This is the so-called “small servicer exemption.” Also for 501(c)(3) nonprofit entities, the proposed rule would exempt certain interest-free, contingent subordinate liens from the credit extension limit under the ability-to-repay rule. This is what’s known as the “small creditor exemption.” As ...

The American Bankers Association, the Consumer Bankers Association and the Financial Services Roundtable urged the Office of Management and Budget to put the kibosh on the CFPB’s proposal to conduct a national telephone survey of 1,000 credit card holders. The proposal is part of the CFPB’s study of the use of mandatory arbitration agreements in connection with the offering of consumer financial products and services. “The associations strongly recommend that OMB not approve the proposal because it will not produce information of practical utility, remains materially flawed and is inconsistent with the statutory mandate,” the groups said in a joint letter. Instead, the groups recommended that the bureau focus on obtaining important consumer information related to arbitration, including information with ...

The Treasury Department issued a wide-ranging request for comments last week as part of an effort to increase issuance of non-agency mortgage-backed securities. Treasury officials said they are working toward developing standards and practices for the non-agency MBS market. “The private-label securities market has been dormant since the financial crisis,” said Treasury Secretary Jacob Lew. “The fact is, we need to attract more private capital to the housing market ...

Any respite the mortgage industry had from enforcement actions under the Real Estate Settlement Procedures Act is over. If there’s one overarching theme about the Consumer Financial Protection Bureau’s vigorous RESPA activity of late, it’s that the basics still count when it comes to compliance, even as the bureau pushes the theoretical envelope in some instances, top industry attorneys say. “RESPA Section 8 enforcement is back. It was in abeyance during the transition of RESPA enforcement from the Department of Housing and Urban Development to the CFPB over the last few years,” said attorney Angela Kleine, an associate in the San Francisco office of the Morrison & Foerster law firm. “But the CFPB is picking up where HUD left off, and then some.” Kleine said...

Loss mitigation activity continued to decline in the first quarter of 2014, driven by better loan performance. That didn’t stop the Treasury Department from extending the Home Affordable Modification Program and related loss mitigation programs for at least another year, through the end of 2016. A total of 132,783 loan modifications were completed in the first quarter, according to Hope Now, down 3.4 percent from the previous quarter and down 45.7 percent from the first quarter of 2013. On a monthly basis, loan mod activity continued to decline in April. Loan mod activity is...

The Treasury Department announced late last week that it is working to develop market practices and standards that would be necessary “to support a safe and sustainable non-agency MBS housing finance channel of significant scale.” As part of the effort, the Treasury posed nine questions to industry participants and is accepting comments on the issue until Aug. 8. Michael Stegman, counselor to the Treasury for housing finance policy, said regulators have addressed most of the problems seen in the non-agency MBS market before the financial crisis. “The last remaining piece of the puzzle is putting in place standards and mechanisms to protect investors in residential MBS, while also clearly defining issuer responsibilities so that they have the confidence to return to the market at scale,” he said. Regulators may have “addressed”...

MBS prices have been hovering around their highs for the year and could stay that way through the fall with minor corrections occurring along the way. “Prices have risen even on the good economic news,” said Joe Farr, director of sales and marketing for MBSQuoteline. “But they fell by about 1 percent over the past week.” Recently, when the Consumer Price Index rose, there was...

The credit quality of the collateral backing the most active types of structured finance securities is slipping, but remains above pre-credit crisis levels, according to Moody’s Investors Service. In a report issued last week, Moody’s cited several trends that signal the potential for higher credit risk, but the rating service said that many sponsors are building in subordination levels and other structural features that result in higher credit quality. “The degree of weaker underwriting and collateral quality in structured transactions varies...

The FHA is seeking comment on two new sections of a proposed single-family handbook for mortgage lenders. The handbook is in development. Once completed, it will serve as the centralized source of current and future FHA policies. Agency staff is collating policies from several handbooks, rules, mortgagee letters, notices and other sources to incorporate into the handbook. The FHA is publishing two new sections, “Doing Business with FHA – FHA Lenders and Mortgagees” and “Quality Control, Oversight and Compliance,” for comment. The “Doing Business” section lays out the requirements for FHA lender approval, including eligibility requirements, application processes, operating requirements and post-approval changes. The section also contains the recertification process as well as processes for applying for ...