Fannie Mae and Freddie Mac in the second half of last year saw a rapid growth of loans with high debt-to-income ratios, thanks in part to the so-called GSE patch. The government-sponsored enterprises enjoy a special exemption under the qualified mortgage rule of the Consumer Financial Protection Bureau. To achieve QM status, a loan must have a DTI ratio of 43 percent or less, but if a mortgage is sold to Fannie or Freddie, DTI ratios can be higher. In the second half of 2017, loans with DTI ratios ...

Acting CFPB Director Mick Mulvaney has reportedly dropped another payday lending case, giving new ammunition to his critics. According to a Reuters report, five people with direct knowledge of the matter said the CFPB under the leadership of Mulvaney decided not to go after National Credit Adjusters and is pondering whether to end cases against three other payday lenders. The agency declined to comment on the Reuters report. Mulvaney said in February the bureau won’t spend a lot of energy ...

CFPB Upgrades Mortgage Servicing Small Entity Compliance Guide. The CFPB has released version 3.1 of its mortgage servicing Small Entity Compliance Guide. The SECG provides a summary of the agency’s 2016 final mortgage servicing rule, which goes into effect April 19. The revised guide incorporates an amendment to the rule released earlier this month, which replaces the previous single-billing-cycle exemption with a single-statement exemption for mortgage servicers ... [Includes three briefs]

More Fannie Mae and Freddie Mac shareholders have initiated lawsuits against the government for the Treasury sweep of the mortgage giants’ profits. Each of the plaintiffs in the three new cases were owners of the GSEs’ junior preferred stock. The cases, Akanthos v. U.S., CSS v. U.S. and Appaloosa v. U.S., have been assigned to Judge Margaret Sweeney, who is also handling other similar complaints. They were filed in the U.S. Court of Federal Claims. According to court documents, Akanthos Opportunity Master Fund owned more than $137 million in junior preferred stock as of Aug. 16, 2016. Akanthos complained of suffering from “severe economic loss” to its holdings.

Impac Mortgage Holdings will continue to focus on originating non-qualified mortgages after a change in leadership at the nonbank. Joseph Tomkinson, the longtime chairman and CEO of Impac, is scheduled to step down in July, with George Mangiaracina taking over as CEO. Mangiaracina has been an executive vice president and managing director at Impac since early 2015. Since then, Impac has boosted its non-QM production while focusing on refinances of conforming mortgages ...

The Senate last week approved a regulatory relief bill that would grant qualified mortgage status to certain loans held in portfolio by smaller banks even if the mortgages would otherwise be non-QMs. The portfolio QM provision also has support in the House, but it has prompted concerns from some industry analysts. Moody’s Investors Service noted that if the provision becomes law, small banks won’t have to meet certain documentation requirements included in the Consumer ...

The Senate voted 67-31 last week to pass the Economic Growth, Regulatory Relief, and Consumer Protection Act, S. 2155, moving the deregulation debate to the House, which will look for more aggressive changes to roll back the Dodd-Frank Act. House Financial Services Committee Chairman Jeb Hensarling, R-TX, said the House would not pass the bill without additional provisions that would further relax regulations introduced after the 2008 financial crisis ...

Sen. Elizabeth Warren, D-MA, continues to be a pain to CFPB Acting Director Mick Mulvaney. She sent another letter to Mulvaney last week, demanding answers about his leadership of the bureau. Since Mulvaney took over the agency in November 2017, Warren and her colleagues have sent him nine letters including 125 questions and requests. In the most recent letter, Warren accused the acting director of failing to answer or inadequately answering 105 of those questions ...

PHH Corp., which is slated to be bought by Ocwen Financial, is waiting to see if it still has any legal liability from a Real Estate Settlement Procedures Act enforcement matter brought by the CFPB, according to a recent 10-K filing. In January 2018, the en banc court of the United States Court of Appeals for the District of Columbia Circuit reinstated an October 2016 panel decision as it related to RESPA issues, which included vacating the CFPB’s order imposing $109 million of disgorgement ...