More than 68 percent of mortgage defects reported in 2016 involved TRID-related and/or loan package documentation issues, according to the latest mortgage quality control industry trends report from ACES Risk Management (ARMCO). “In 2016, the entire lending industry was impacted by the enhanced regulatory oversight of the CFPB as the long-awaited implementation of TRID was fully realized,” the report noted. “Many lenders spent the better part of the first quarter addressing the multitude of mistakes associated with TRID.” In some instances, this produced loans that could not be sold on the secondary market. “A wave of corrective action followed, and soon the sheer amount of resources directed at solving these issues became overwhelming for many lenders,” ARMCO added. The top...

The Treasury Department said the so-called GSE patch gives Fannie Mae and Freddie Mac an unfair advantage in the mortgage market, and it recommended eliminating this exception to the qualified-mortgage rule. In a financial regulations report released this week, the Treasury detailed a host of executive actions and regulatory changes that it believes can immediately stimulate economic growth, increase capital access and protect taxpayers. Adjusting and clarifying the ability-to-repay/qualified mortgage rule and phasing out the GSE patch are among those changes listed. The GSE patch, created under Dodd-Frank, allows GSE eligible loans to qualify for QM status, even if the DTI exceeds the standard 43 percent ratio.

A new lawsuit arguing the merits of the Treasury net worth sweep was filed in Michigan, while other cases continue to hang in the balance in various phases of discovery. Michael Rop, Stewart Knoepp and Alvin Wilson v. the Federal Housing Finance Agency was filed this month by three shareholders who want the court to vacate the third amendment to the preferred stock purchase agreement and declare the structure of the Federal Housing Finance Agency unconstitutional.According to court documents, the trio is looking to challenge “both past and ongoing abuses of power by a federal agency that operates wholly outside of the system of limited and divided government established by the constitution.”

This week, the Federal Reserve’s Open Market Committee provided a bit more information on the process it plans to follow in shrinking the size of its massive balance sheet, once it decides the time is right to finally begin. “Provided that the economy evolves broadly as the committee anticipates, we currently expect to begin implementing a balance sheet normalization program this year,” Fed Chair Janet Yellen said in her post-meeting press conference. The hope is to initiate an incremental and largely predictable decline in the U.S. central bank’s securities holdings. The FOMC intends...

The Trump administration wants to pare back regulations that inhibit the non-agency MBS and ABS market and tilt current securitization economics that favor the government-sponsored enterprises over private issuers. “In order to revitalize a responsible [private-label securities] market, it is important to improve incentives for issuers through reasonable reductions in costs and regulatory burdens,” the Treasury Department said in a new report released this week. In particular, it aimed at adjusting relative economics for the government-sponsored enterprises and FHA/VA mortgage programs. On the regulatory side, Treasury recommends...

Fannie Mae General Counsel Brian Brooks is rumored to be up for a top post at the Treasury Department, a development that if consummated would add yet another seasoned industry veteran familiar with the government-sponsored enterprises to the agency. What that might mean for “administrative” reform of Fannie Mae and Freddie Mac is another question. As Inside MBS & ABS went to press this week, Brooks – who joined Fannie from OneWest Bank in November 2014 – had not been...

The average daily trading volume in agency MBS fell to $185.1 billion in May, the lowest reading of the past 17 months, according to the Securities Industry and Financial Markets Association. Year-to-date, the average is still ahead of last year’s pace but not by much: $204.2 billion compared to $201.9 billion for 2016. But these are interesting times for investors as both bonds and stocks continue to rally near new highs. Earlier this week, the yield on the benchmark 10-year Treasury fell to 2.12 percent, the lowest reading since the November election. It’s...

The spring and summer home-buying season is in full throttle and with rates falling to yearly lows, mortgage bankers should be hiring in droves. Right? Not necessarily. Top-ranked lenders such as Quicken Loans and Movement Mortgage report they continue to search for new talent, but others are being careful about their hiring plans. Employment in the mortgage brokerage sector has been...

There are three important trends in the consumer complaint space, each bearing important lessons for mortgage lenders, regardless of size or structure, according to top compliance experts. Speaking to an audience at the American Bankers Association’s annual regulatory compliance conference in Orlando earlier this week, Carol Hunley, deputy chief compliance officer at Ally Financial Services, detailed each of them and their significance for lender compliance. First, the lending environment is...

The agency servicing market grew steadily in the first quarter of 2017, as the business continued to slide toward nonbanks, a new Inside Mortgage Finance analysis reveals. The Federal Reserve late last week reported that total residential mortgage debt outstanding rose 0.7 percent during the first quarter, hitting $10.330 trillion. It marked the eighth consecutive quarterly increase since the sector hit its post-crash low in March 2015 at $9.912 trillion. Most of the growth came from the agency market, although portfolio holdings – including nonbanks – were...[Includes two data tables]