Mortgage bankers that trade in the to-be-announced MBS market will be exempt from the initial margin requirements associated with the Financial Industry Regulatory Authority’s revised Rule 4210, which was approved by an order of the Securities and Exchange Commission last week. Under the rule, as amended now three times by FINRA, market participants who trade TBAs will have to post an initial “maintenance” margin of 2 percent of net position size, along with an on-going variation margin, which will be subject to a $250,000 minimum transfer amount. However, the SEC order provided...

Several more court documents were released over the past week that offer additional details into the circumstances surrounding the Treasury Department’s decision to replace the quarterly dividend Fannie Mae and Freddie Mac had been paying in conservatorship with a net worth sweep. Industry observers say the new memos and deposition transcripts reinforce the notion that the government had been planning the sweep for a while before it was implemented in late 2012. The government-sponsored enterprises’ shareholders have been challenging...

Since the United Kingdom voted to leave the European Union a week ago, interest rates in the U.S. have been steadily falling, causing a rally in MBS prices. According to market watchers, Fannie Mae/Freddie Mac MBS values for new securities haven’t been this good since January 2015. Meanwhile, mortgage rates touched a three-year low the past few days with some primary market lenders making new loans at 3.25 percent and no points. As Inside MBS & ABS went to press, the benchmark 10-year Treasury was yielding...

Thanks to last week’s “Brexit” vote in the U.K. interest rates in the U.S. are tumbling again, reaching new lows for the year. In turn, lenders are celebrating the increased flow of applications while the servicing side of their businesses prepares for the worst. For servicers – especially publicly traded companies – there is a palpable fear of deep mortgage servicing rights markdowns that almost certainly will affect second-quarter results. And the timing couldn’t be worse: the rate drop comes with no room left for recovery. The second quarter has ended. Over the past year, several publicly traded mortgage firms – Ocwen, PHH Corp., Stonegate Mortgage and Walter Investment Management Corp., to name a few – have been...

Given the extensive and uncertain administrative, civil and contractual liabilities mortgage lenders are confronted with under the new TRID disclosure regime, anxiety about the inevitable mistakes that will occur remain high. But there are a few remedies available to lenders. During a presentation at the recent American Bankers Association regulatory compliance conference in San Diego, Rich Horn, founding attorney at Rich Horn Legal in Washington, DC, spelled out just what options exist for mortgage lenders to “cure” loans with defects under the Consumer Financial Protection Bureau’s integrated-disclosure rule. “If you have liability for a TRID violation, how do...

Given the high stakes associated with the CFPB’s Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule, commonly known as TRID, the mortgage lending industry perhaps can be forgiven for being hyper-sensitive to minute, incremental change, whether it be another clarifying rulemaking or a change in enforcement.Sometimes, these developments could be a matter of perception or semantics; at other times, facts on the ground may actually be changing. “Uncertainty about enforcement on TRID mirrors the uncertainty on the rule itself. TRID has been an extremely complex regulation for the industry to implement,” American Land Title Association CEO Michelle Korsmo told Inside the CFPB. “ALTA has continuously encouraged the CFPB to provide more written guidance on the 1,888-page ...

There is plenty of speculation in the mortgage industry these days about which issues are going to be addressed in the CFPB’s pending proposed rule to clarify many of the uncertainties associated with its Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure Rule, commonly known as TRID. During a panel discussion at the American Bankers Association’s annual regulatory compliance conference in San Diego earlier this month, Rodrigo Alba, senior vice president and senior regulatory counsel with the ABA, speculated that one of the main areas the bureau will address is the codification of the informal guidance CFPB officials have provided since the rule was released. As he sees it, the bureau will take all of the content and ...

Late last week, the Structured Finance Industry Group, a securitization trade association, put out its long-awaited compliance review documentation related to the CFPB’s integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. SFIG said its RMBS 3.0 TRID Compliance Review Scope documentation was put together by representatives of third-party review firms across the industry and its own RMBS 3.0 Due Diligence, Data and Disclosure Working Group.The material addresses TRID compliance issues on non-agency mortgages uncovered during reviews by due diligence providers. Under the standards, loans that would have received grades of C or D due to TRID exceptions can sometimes receive B grades if errors are corrected. The document was created to ...

Mortgage lenders throughout the land are justifiably anxious about complying with the CFPB’s TRID integrated disclosure rule. But compliance professionals at Treliant Risk Advisors recently provided a number of key checkpoints that lenders can use to prepare themselves and examine their own degree of compliance. During a presentation at the American Bankers Association’s recent regulatory compliance conference in San Diego, Lyn Farrell, a managing director at Treliant, rattled off a list of TRID technical compliance testing criteria for attendees. First, lenders should “ensure that the testing scope includes all covered products from all applicable channels,” Farrell said. They also should check that their institution provides all disclosures by the appropriate deadlines, including, of course, all loan estimates and closing disclosures....

Mortgage lenders looking to get ahead of the fair lending enforcement curve need to be aware that the industry will face greater scrutiny from the CFPB on two main fronts: access to credit and pricing issues, according to one top attorney. Speaking at the American Bankers Association’s recent regulatory compliance conference in San Diego, Andrew Sandler, chairman and executive partner at the BuckleySandler law firm in Washington, DC, said, “There are really two sets of issues that we’re seeing in fair lending, and that we’re increasingly going to see over time. The first is access to credit as an absolute concept.” As the U.S. came out of the financial crisis, as policymakers adopted all kinds of rules, regulations, philosophies and ...