The Republican effort to reform many aspects of the Dodd-Frank Act was approved by the House Financial Services Committee last week on a party-line vote. The Financial CHOICE Act will likely be approved by the full House at some point, but DFA reform doesn’t appear to be a priority in the Senate. The House panel approved H.R. 10, the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act, on a 34-26 vote after a three-day markup ...

Wells Fargo is planning to issue non-agency mortgage-backed securities this year, Franklin Codel, a senior executive vice president of consumer lending at the bank, said during an investor presentation this week. It will be the first post-crisis non-agency MBS from Wells. He said the deals will help test whether Wells can improve investor confidence in non-agency MBS. Ellington Financial plans to issue a non-agency mortgage-backed security backed by ... [Includes four briefs]

The Department of Veterans Affairs’ interim final rule on qualified mortgages (QM) implements the Dodd-Frank provision requiring creditors to make a reasonable and good faith determination that the borrower has a reasonable ability to repay the loan. The VA interim final rule defines QM to mean any loan that the agency guarantees, insures or originates. However, certain limitations apply to VA’s Interest Rate Reduction Refinance Loans (IRRRLs) in the rule’s guidance for “safe harbor.” Under the safe harbor requirements for an IRRRL, the loan being refinanced must have been originated at least six months before the new loan’s closing, and six payments must have been made. In addition, the veteran should not have been more than 30 days past due during the six months preceding the new loan’s closing. The QM rule’s six-month seasoning requirement, however, inadvertently created an ...

The Department of Veterans Affairs has issued guidance clarifying its requirements for completing the Interest Rate Reduction Refinance Loan Worksheet. The guidance is effective for all IRRRL applications originated on or after July 2, 2017. The VA said it has received many inquiries from lenders regarding the proper completion of IRRRL Worksheet (VA Form 26-8923) since the implementation of the TRID-LE and CD (Truth in Lending Act-Real Estate Settlement Procedures Act Integrated Loan Estimate and Closing Disclosure.) The guidance clarifies and establishes VA policy regarding the following: Amount of the existing allowable loan balance (Line 1); Principal reduction from veteran (Line 2); Maximum allowable discount points (Line 5); Maximum allowable closing costs (Line 8); Maximum allowable closing costs (Line 11); and Maximum loan amount (Line 18). VA said it understands the ...

Mortgage industry officials are gearing up to weigh in once again on the mortgage servicing rules the Consumer Financial Protection Bureau issued back in 2013. Last week, the CFPB released its proposed plan to assess the rules as required by the Dodd-Frank Act. The bureau plans to evaluate how adequately its rule has met four key purposes: responding to borrower requests and complaints in a timely manner; maintaining and providing accurate information; helping borrowers avoid unwarranted or unnecessary costs and fees; and facilitating review for foreclosure avoidance options. The bureau plans...

Federal Housing Finance Director Mel Watt this week expressed strong reluctance to allow Fannie Mae and Freddie Mac to be forced to take another draw on their Treasury line of credit. “FHFA has explicit statutory obligations to ensure that each enterprise ‘operates in a safe and sound manner’ and fosters ‘liquid, efficient, competitive and resilient national housing finance markets,’” Watt testified in a hearing at the Senate Banking, Housing and Urban Development Committee. “To ensure that we meet these obligations, we cannot risk...

The House Financial Services Committee last week spent three days marking up the Republican majority’s alternative to the Dodd-Frank Act. H.R. 10, the Financial CHOICE Act, introduced late last month by committee Chairman Jeb Hensarling, R-TX, would make a number of changes to the mortgage regulatory landscape. One provision would provide a safe harbor against litigation for residential mortgages held on the lender’s balance sheet since the origination of the loan if the mortgage fails to comply with ability-to-repay requirements. The measure also would revise the definition of “points and fees” under the Truth in Lending Act to exclude fees paid for affiliated business arrangements. Other language in the bill would exempt smaller creditors from TILA’s escrow requirements. Another provision ...

Rep. Andy Barr, R-KY, last week re-introduced the Portfolio Lending and Mortgage Access Act (H.R. 2226), legislation that aims to expand access to mortgage credit by conferring qualified mortgage status upon loans originated by a bank and held in portfolio. The bill sponsor also hopes that it will discourage the practices that led to the 2008 financial crisis and the resulting taxpayer bailouts of Fannie Mae, Freddie Mac, and too-big-to-fail financial institutions. The legislation had some bipartisan support when Barr introduced it in the previous Congress, passing the U.S. House of Representatives by a vote of 255-174. However, the measure never made it out of the Senate Banking, Housing and Urban Affairs Committee. Supporters hope this time around will be ...

Lenders should think twice about offering non-qualified mortgages that depend only on a borrower’s assets – particularly a big downpayment – to establish the borrower’s ability, a new report from the CFPB suggests. In the spring edition of the bureau’s supervisory highlights, issued last week, the regulator warned that a large downpayment alone is not enough to prove a borrower’s ability to repay a non-QM that is based on the consumer’s assets. “As an initial matter, a downpayment cannot be treated as an asset for purposes of considering the consumer’s income or assets under the ATR rule,” said the CFPB. “The ATR rule requires creditors to consider a consumer’s reasonably expected income or assets, ‘other than the value of the dwelling, including ...

The CFPB last week released its plan to assess the effectiveness of its mortgage servicing rule under the Real Estate Settlement Procedures Act and is requesting public input. The bureau issued its mortgage servicing rules under RESPA and Regulation X back in January 2013, and amended the final rule on several occasions before it took effect Jan. 10, 2014. The final rule addressed six major topics: force-placed insurance; error resolution and information requests; general servicing policies, procedures and requirements; early intervention with delinquent borrowers; continuity of contact with delinquent borrowers; and loss mitigation procedures. With its assessment plan, the bureau intends to focus on how well its rule has met four key purposes: responding to borrower requests and complaints in ...