Investors in non-agency U.S. residential mortgage-backed securities are unlikely to face much in the way of risk stemming from lender non-compliance with the new requirements of the CFPB’s integrated disclosure rule known as TRID, according to analysts at Fitch Ratings. “Although the frequency of non-compliance issues will likely be elevated initially as lenders implement the new changes, those non-compliance issues are not likely to translate into higher risk for bondholders,” the analysts said in a recent report. Their initial due diligence sampling of prime jumbo mortgages in the secondary market has revealed a high level of compliance issues thus far. However, most of them appear to be good-faith errors. The ratings service is continuing its discussions with market participants on ...

Credit union representatives are urging the CFPB to address the increased regulatory burden associated with complying with the bureau’s new Home Mortgage Disclosure Act regulation, as well as related privacy issues the new rule raises. “The final rule added a significant number of new data points to the reporting requirements established in Regulation C, while modifying almost all the existing data points,” said Alexander Monterrubio, regulatory affairs counsel for the National Association of Federal Credit Unions, in a recent comment letter to the CFPB. While some of the data points were specifically mandated by the Dodd-Frank Act, many of them were added at the bureau’s discretion, and that will prove to be problematic. “These discretionary data points have swelled the ...

On the three-year anniversary of the adoption of the CFPB’s final loan originator compensation rule, the Community Home Lenders Association wrote the bureau, renewing its call for “ending the exemption bank loan originators enjoy from passing a mortgage competency test.” The Jan. 20, 2013, LO comp rule implemented Section 1402(b)(1)(A) of the Dodd-Frank Act, which requires that all mortgage loan originators be “qualified.” In the final rule, the CFPB elected not to impose a Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act) test requirement on bank loan originators or impose other related SAFE Act requirements that are imposed on non-bank LOs. Subsequently, the CHLA has called for higher bank loan originator qualifications standards, including a mandatory universal requirement ...

Here are the Top 10 TRID Deficiencies, According to One Lender. The folks at Stearns Correspondent Lending recently published a list of the top 10 compliance deficiencies associated with the CFPB’s integrated disclosure rule, as follows: 1.The Closing Disclosure was not provided to the borrower within three business days of the closing date. 2. Various unspecified issues with the Loan Estimate.3. The Loan Estimate was not disclosed to the borrower within three business days of the application date. 4. Borrower(s) did not receive the Loan Estimate within four business days of the closing date. 5. The lender failed to provide a valid change of circumstance for all subsequent Loan Estimates in the file. 6. The lender failed to ...

PHH, CFPB Have a Court Date. The U.S. Court of Appeals for the District of Columbia has scheduled to hear oral arguments in the case of PHH Corp. v. CFPB on April 12 at 9:30 am ET. Analysts at Compass Point Research & Trading said in a client note that “the oral argument date is consistent with our expectations and supports our 4Q16 estimate for a decision.” The crux of the dispute is the bureau’s assertion that PHH violated the Real Estate Settlement Procedures Act by illegally referring borrowers to mortgage insurance companies in exchange for kickbacks. Back in January 2014, the CFPB initiated an administrative proceeding against PHH. Administrative Law Judge Cameron Elliot subsequently held that PHH’s referrals of ...

Credit Plus Offers Reps-and-Warrants Coverage to Help Lenders Cope with CFPB, OCC Expectations. Credit Plus, a Salisbury, MD-based third-party verifications specialist for mortgage professionals, has come out with representations-and warranties-insurance coverage for all of its services, responding to the CFPB’s and the Office of the Comptroller of the Currency’s expectation that lenders are now ultimately responsible for practicing effective third-party risk management. The insurance coverage allows customers to better defend their companies against the negative financial consequences of a possible loan default and the resulting repurchase requests, the company said. “While we are confident in the quality of our verification services, we are also a strong proponent of best practices,” said Greg Holmes, national director of sales and marketing at ...

New issuance of non-mortgage ABS fell 6.6 percent last year even though the market’s biggest segment pushed to a new post-crash high, according to a new Inside MBS & ABS analysis. A total of $173.05 billion of non-mortgage ABS were issued in 2015, the second-highest annual output since 2008. The direction, however, was less encouraging. New issuance tumbled 17.1 percent from the third to the fourth quarter, sinking to $30.69 billion – the lowest three-month total in over three years. But with record sales in the U.S. auto industry, securitization of vehicle-finance contracts increased...[Includes two data tables]

About a month after risk-retention requirements took effect for newly issued non-agency MBS, industry participants continue to work on complying with the standards set by the Dodd-Frank Act. Non-agency MBS issued on Dec. 24, 2015, and beyond are subject to risk-retention standards. The standards will apply to other MBS and ABS asset types for deals issued on and after Dec. 24 of this year. The first jumbo MBS subject to risk-retention requirements is scheduled...

Issuers of MBS and ABS continue to address compliance issues with the Securities and Exchange Commission’s so-called Regulation AB2. Meanwhile, the Structured Finance Industry Group has urged the SEC to continue to delay further action on disclosure proposals that remain outstanding. In August 2014, the SEC published a final rule setting a variety of disclosure requirements for the structured finance market. Issuers of publicly registered MBS and ABS were required to comply with rules, forms and disclosures established by Reg AB2 by Nov. 23, 2015. Asset-level disclosure requirements will take effect Nov. 23 of this year. During a webinar hosted by the law firm of Mayer Brown late last week, Stuart Litwin, a partner at the law firm, said...

The servicing auction market experienced a flurry of deals at yearend 2015, but investors for the most part have been more cautious about what they’re willing to pay for mortgage servicing rights, given some of the large markdowns that damaged second- and third-quarter earnings. “A lot of investors got hurt by buying during the first half of last year,” said one MSR investor who spoke under the condition his name not be used. “A few of them aren’t bidding anymore.” During the first half of 2015, MSR buyers were willing...