Concerns about how borrowers will be impacted by a change in servicers go beyond mortgages in non-agency MBS. Analysts at Moody’s Investors Service warn that the decentralized servicing models used for consumer loan ABS issued by Springleaf Holdings and OneMain Financial face significant risks in the event that servicing needs to be transferred. Both Springleaf and OneMain originate consumer loans at local branches, where they conduct certain servicing operations and collections. The decentralized model can help boost originations and loan performance, though there are risks for investors in consumer ABS with decentralized servicing. “As long as the originator maintains the customer relationship and local presence, this ‘high-touch’ model can help...

Fitch Ratings has issued a report updating its standards for rating residential MBS under the ability-to-repay and qualified mortgage rules that went into effect early last year. Issued by the Consumer Financial Protection Bureau, the rules outline a set of underwriting criteria, which, when met for a particular loan, protects the lender from any undue litigation risk and provides a safe harbor for the loan. The rules affect...

Originations of loans that don’t meet standards for qualified mortgages have been off to a slow start but officials at Impac Mortgage Holdings suggest that non-QM lending is poised for growth. Joseph Tomkinson, Impac’s chairman and CEO, said the government-sponsored enterprises’ dominance of mortgage originations has limited non-QM originations. “We knew going into this that it would be a slow growth,” he said this week during a call with investors ...

Non-qualified-mortgages accounted for 1.8 percent of mortgages originated in the fourth quarter of 2014 by 22 lenders surveyed by the National Association of Realtors. NAR noted that most of the lenders in the survey don’t portfolio their originations, which could skew the non-QM share significantly lower compared with lenders that hold non-QMs in portfolio. Some 5.0 percent of originations by lenders surveyed by NAR in the third quarter of 2014 were non-QMs ... [Includes three briefs]

The integrated disclosure rule from the Consumer Financial Protection Bureau continues to shake up the mortgage industry months before it even takes effect. Particularly unsettled are settlement agents, who hope they continue to stay relevant in the new world of mortgage originations, but fear their role will be diminished if not rendered obsolete. “The lender is ceding less authority to the closing agent but they are still letting them close the transactions with greater supervision,” said one industry insider. “Could that change? There is a fear it might, but that is not how it is now.” Joseph Ventrone, vice president for regulatory and industry relations at the National Association of Realtors, put...

Creditworthy buyers are being constrained by dated scoring systems, according to a study released this week by VantageScore Solutions, which says there are benefits to Fannie Mae and Freddie Mac, as well as consumers, if a new model is adopted. The enterprises could increase their revenue while expanding access to mortgages to a more diverse group of consumers. The credit reporting company has been working to get Fannie and Freddie to embrace a new credit reporting system for years now. Its new report comes on the heels of the Federal Housing Finance Agency comments in its 2015 scorecard directing the GSEs to look into potential alternative forms of credit scoring.

The mortgage industry isn’t achieving any more success than lawmakers on Capitol Hill in convincing the Consumer Financial Protection Bureau to take it easy on lenders when it’s time to start enforcing its integrated disclosure rule. Speaking at the American Bankers Association’s government relations event in Washington, DC, earlier this week, Virginia O’Neill, head of regulatory compliance for the trade group, recounted for attendees the experience of one community bank ...

It looks like some of the biggest mortgage lenders in the nation will be closing their loans themselves largely without closing agents, once the CFPB’s integrated disclosure rule kicks in Aug. 1, 2015, one top vendor representative revealed recently. And that might put the big banks at a competitive advantage vis-à-vis their nonbank rivals. “Because this is a paradigm shift, and because the liability is staying on the lender side – both in terms of the accuracy of the disclosure and in the timing – we’ve heard some of the bigger lenders are going to close the loans themselves instead of using settlement agents,” John Vong, CEO of ComplianceEase, told Inside the CFPB recently. “For some of the banks, they have already ...

The CFPB’s latest Supervisory Highlights report identified a number of issues observed during examinations related to mortgage origination, fair lending, consumer reporting, debt collection, and deposits. “In one or more examinations, examiners found that branch managers were loan originators and owners of related marketing services entities,” the report said. Examiners “found instances of improperly allocated expenses on branch income statements which resulted in marketing services entities receiving income based on the profitability of retail loans originated by branch managers. Consequently, branch managers, as owners of the marketing services entities, received compensation based on the terms of transactions originated by the branch managers themselves.” In these cases, bureau examiners directed that compensation to loan originators based on a term of a ...

The CFPB issued a formal notice and request for information on how the credit card market is functioning and the effect credit card protections are having on both issuers and consumers. As per the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, the CFPB is required to conduct a review of the consumer credit market every two years. Among its focal points, the bureau wants to know how the terms and conditions of credit card agreements have changed since it conducted its review of the credit card market two years ago. “The bureau is looking to see how card issuers may have changed their pricing, marketing, underwriting, or other practices and whether those changes have benefited or harmed consumers,” the ...