With the industry still waiting for resolution of PHH Corp. v. CFPB and the interpretation and enforcement of the Real Estate Settlement Procedures Act at stake, political partisans on Capitol Hill last week addressed the constitutionality of the CFPB, or the supposed lack thereof, with Republicans on the offense and Democrats on defense. During a hearing last week before the House Financial Services Subcommittee on Oversight and Investigations, Rep. Trey Hollingsworth, R-IN, asked former U.S. Solicitor General Theodore Olson, now a partner with the Gibson, Dunn & Crutcher law firm, what steps would need to be taken to make the CFPB truly constitutional in its governmental function. Olson, who is representing PHH Corp. in its struggle with the bureau but ...

The CFPB has fined Nationstar Mortgage $1.75 million for allegedly violating the Home Mortgage Disclosure Act by “consistently failing to report accurate data about mortgage transactions for 2012 through 2014,” the agency said. The CFPB said it found that Nationstar’s HMDA compliance systems were flawed and generated mortgage lending data with significant, preventable errors. “Nationstar also failed to maintain detailed HMDA data collection and validation procedures, and failed to implement adequate compliance procedures,” the bureau alleged. “It also produced discrepancies by failing to consistently define data among its various lines of business.” Further, data samples reviewed by the CFPB showed substantial error rates in three consecutive reporting years, the bureau said. “In the samples reviewed, the CFPB found error rates ...

Late last week, the CFPB proposed amendments to Regulation B, the implementing regulation of the Equal Credit Opportunity Act, to give mortgage lenders greater flexibility in collecting information about consumer ethnicity and race. Reg B restricts lenders’ ability to ask consumers about their race, color, religion, national origin or gender, except in certain circumstances. These circumstances include required collection of the information for some mortgage applications under the regulation. Under the proposal, mortgage lenders would not have to maintain different practices depending on their loan volume or other characteristics, allowing more lenders to adopt application forms that include expanded requests for information about a consumer’s ethnicity and race, including the revised uniform residential loan application issued by government-sponsored enterprises Fannie ...

With the topic of regulatory reform experiencing a resurgence of attention since the Trump administration moved into the White House, the U.S. mortgage insurance industry is calling for greater uniformity when it comes to the nitty gritty details of the ability-to-repay rule and its qualified-mortgage standard. One area of particular concern for mortgage insurers is the differences between the CFPB’s QM rule for conventional mortgages and the Department of Housing and Urban Development’s QM rule for FHA-insured mortgages. These differences include different debt-to-income caps, different formulae to calculate points and fees, and different standards for higher-cost mortgages. According to U.S. Mortgage Insurers, these differences incentivize greater reliance on programs of the U.S. government, increasing risk to taxpayers. “While consistency and ...

Fitch Ratings was the most active provider of credit ratings for non-mortgage ABS and non-agency MBS in 2016, a new Inside MBS & ABS analysis reveals. Fitch edged out Standard & Poor’s in a busy ABS market, garnering a 54.8 percent share of rated transactions last year. The company boosted its ABS ratings business by 4.6 percent compared to 2015, based on dollar volume, nudging its market share up 1.9 percentage points. Fitch’s deepest penetration was...[Includes two data tables]

The average daily trading volume in agency MBS declined to $202.4 billion in February, one of the worst readings over the past six months, according to figures compiled by the Securities Industry and Financial Markets Association. In January, volume was a bit healthier at $229.8 billion, but that was before concerns began to mount about President Trump’s business agenda and how successful the new White House might be in rolling back regulations – financial and otherwise. As Inside MBS & ABS went to press this week, fears were...

Observers of the subprime auto ABS market are raising concerns as delinquencies rise above peaks seen during the financial crisis as lenders have loosened underwriting standards in search of market share. According to Fitch Ratings’ index of subprime auto ABS, 60+ day delinquencies on loans backing the securities hit 5.45 percent at the end of 2016. Delinquencies were up from 4.70 percent at the end of 2015 and 41 basis points higher than the peak for the sector in 2009. The index tracks an outstanding balance of $38.6 billion from 149 transactions. There were 21 active shelves in the index, up from 12 active issuers in 2010. “Smaller lenders along with recent new entrants are...

Last year was a decent enough year for the student loan sector, and so far this year, the space is looking dramatically more robust, according to analysts at the DBRS ratings service. New issuance so far in 2017 is more than twice that from the same period last year, with volume exceeding $4.5 billion, according to Jon Riber, a senior U.S. ABS ratings analyst at DBRS. “There are...

New originations of home-equity loans were up 8.0 percent in 2016 from the previous year, but the market peaked early and ended with consecutive quarterly declines in production, according to a new Inside Mortgage Finance ranking and analysis. Lenders originated an estimated $197.6 billion of home-equity lines of credit and closed-end second mortgages last year. It was the strongest output since 2008, but it was not enough to offset the years-long erosion of second-mortgage debt. At the end of 2016, the supply of outstanding home-equity loans fell...[Includes three data tables]

The Trump administration late last week filed its amicus brief with the U.S. Court of Appeals for the District of Columbia Circuit in PHH Corp. v. Consumer Financial Protection Bureau, and, as expected, sided with the lender this time around, but didn’t go as far as some had hoped it would. In its brief, the Department of Justice argued in support of eliminating the removal-only-for-cause protection that currently applies to the director of the CFPB. However, whereas PHH has argued that the CFPB be eliminated in its entirety, the Trump administration argued in favor of retaining the CFPB, but with a director removable at the will of the president. Currently, the director may be removed...