Lender compensation of loan originators has become a whole new world now that the Consumer Financial Protection Bureau has taken over enforcement for many lenders. During an Inside Mortgage Finance webinar this week, three top legal experts spelled out multiple lessons lenders should learn if they wish to avoid the fate that has befallen some of their peers at the hands of the CFPB. Kristie Kully, a partner with the K&L Gates law firm, drew a number of key take-aways from the first such enforcement action brought by the bureau, which occurred in November 2013, when the CFPB accused Castle & Cook and two of its executives of paying illegal bonuses for steering consumers into costlier mortgages. More specifically, the bureau alleged...

Commercial banks and savings institutions reduced their holdings of non-mortgage ABS again during the second quarter, according to a new Inside MBS & ABS analysis of call reports. Banks and thrifts held $147.55 billion of non-mortgage ABS as of the end of June, a 5.1 percent decline from the previous quarter. The banking industry’s aggregate ABS portfolio has been shrinking steadily since the end of 2013 and was down 15.2 percent over that period. Banks shed...[Includes two data tables]

Ginnie Mae this week revised its requirements for participating MBS issuers seeking approval of changes in their business status as a result of mergers, change of ownership or control, transfer of assets or a negative turn in their dealings with regulatory agencies. The agency decided to update the guidance because of the increasing number of requests from issuers, according to Ginnie Mae President Ted Tozer. The requests are getting more complex as well, he said. The agency’s Mortgage-Backed Securities Guide has been updated...

Servicing federal student loans would likely become more costly and cumbersome under a set of best practices recently issued by a White House-sponsored interagency panel. Back in March, the Obama administration assembled a group of officials from the Treasury Department, the Department of Education, the Office of Management and Budget, and the Domestic Policy Council to monitor trends in the government’s student loan portfolio, budget costs and borrower assistance efforts. As part of that effort, the task force was directed...

With the effective date of the Consumer Financial Protection Bureau’s integrated disclosure rule now just weeks away, industry representatives are escalating the amount of compliance advice they are offering to real estate agents and lenders. This week, the Mortgage Bankers Association released a variety of materials to facilitate complete conformity with the bureau’s pending disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act ...

As they approach their eighth year in conservatorship, Fannie Mae and Freddie Mac generate a lot of revenue for the government and dominate the conventional-conforming mortgage market. But both government-sponsored enterprises are forced to hold less and less capital, and a bad quarter or two could force another round of bailouts. Aside from lawsuits by disgruntled GSE shareholders, pressure appears to be growing for a new approach that would allow the two to rebuild their capital. According to reports, Rep. Mick Mulvaney, R-SC, may introduce such a bill in one of the least hospitable places it could land, the House Financial Services Committee. As of press time Mulvaney’s office has not returned...

Concerns about litigation and various pricing issues have combined to suppress originations of non-qualified mortgages to borrowers who aren’t affluent, according to industry analysts. Since the Consumer Financial Protection Bureau’s ability-to-repay rule and QM standards took effect in early 2014, a certain portion of the non-QM market has held up fairly well: interest-only mortgages. However, the loans tend to be available solely for affluent borrowers, while non-QM originations for less-than-prime borrowers remain limited. Most non-QM lenders are targeting...

The Oct. 3, 2015, effective date for the Consumer Financial Protection Bureau’s integrated disclosure rule is just weeks away, leaving the mortgage industry a shrinking window of time in which to convince members of Congress and the White House to provide regulatory relief. Although Republicans likely have enough votes to force a multi-prong regulatory relief bill through both chambers of Congress, the Obama administration appears to remain opposed, even if the White House has been sitting on the sidelines and completely disengaged. “On the TRID [implementation] extension, there’s...

The Ninth Circuit Court of Appeals agreed with the CFPB on its interpretation of the Real Estate Settlement Procedures Act, but refused to “give deference” to the amicus brief in which the bureau’s argument was presented. “Here, CFPB is interpreting the statute, not the regulation. An agency’s interpretation of the statute – when presented in an amicus brief – is not promulgated in the exercise of its formal rulemaking authority, so no … deference is warranted,” ruled the court. Further, even if certain terms in the statute also appear in the regulation, the CFPB “is in fact interpreting Congress’s words in the statute, so we give no deference to CFPB’s interpretation,” the court said. “In addition, because the statutory terms at issue ...

Members of the U.S. Senate and House of Representatives are returning to Washington, DC, this week, after their August recess concluded with the Labor Day holiday weekend. That means mortgage industry officials have less than one month to convince Congress and the Obama administration to sign off on regulatory relief from the CFPB’s pending TILA-RESPA Integrated Disclosure (TRID) rule, which kicks in Oct. 3, 2015. Last week, the Mortgage Bankers Association began a grass-roots lobbying campaign urging its members to get in touch with their respective members of Congress to support legislation that would establish a temporary enforcement grace period and legal safe harbor under the TRID. “A temporary legal safe harbor for lenders will ensure the new requirements are ...