Federal regulators will make their next move on risk retention and defining qualified residential mortgages in September, according to the Federal Reserve. Meanwhile, the Securities and Exchange Commission is working on a number of long-pending MBS rules, including the so-called Reg AB2. The Fed expects to take further action on risk retention in September, according to its latest regulatory agenda. The SEC, which is jointly working on the risk-retention rule with the Fed and other agencies, was vague, stating that the next action date was undetermined. Regulators have received...
With six months left before a host of rules from the Consumer Financial Protection Bureau kick in, mortgage industry representatives continue to ask for changes and clarifications including some related to the components of the pending qualified mortgage points-and-fees calculation. Early this month, the CFPB formally proposed for public comment amendments to rules issued in January under the Equal Credit Opportunity Act, Real Estate Settlement Procedures Act and the Truth in Lending Act. Much of the focus of the proposed amendments relates to loan originator compensation and mortgage servicing issues. Industry commenters focused...
In what may well be his last appearance before Congress as chairman of the Federal Reserve, Ben Bernanke this week indicated the central banks much-debated tapering of its massive asset purchase program is likely to begin later this year and then cease altogether by the middle of 2014, assuming the U.S. economy progresses as the Fed anticipates. At the same time, the Fed chief emphasized the Federal Open Market Committee will continue to be flexible in responding to market and economic conditions, all based on the flow of data coming into the committee. Bernanke said the FOMC has made...
The Federal Housing Finance Agency and the Treasury Department illegally implemented the so-called sweep amendment last summer that altered Fannie Maes and Freddie Macs preferred stock purchase agreements to seize nearly all the two GSEs profits, in direct violation of the 2008 conservatorship legislation, according to investors lawsuits filed in federal court last week. Unlike the initial litigation filed by investors last month that challenges the entire 2008 government takeover of Fannie and Freddie, the separate suits filed by hedge-fund Perry Capital and by Fairholme Capital Management claim that Treasurys August 2012 amendment to the preferred stock purchase agreements violated the Housing and Economic Recovery Act of 2008, which placed the GSEs in conservatorship.
The high-stakes game of chicken Congressional Democrats and Republicans have been playing for the better part of the last two years over President Obamas nomination of Richard Cordray to be director of the Consumer Financial Protection Bureau came to an end this week as GOP members of the Senate blinked first. On Tuesday, the Republicans agreed to allow an up-or-down vote on Cordray to avert a showdown over longstanding filibuster rules in the Senate. Sen. Majority Leader Harry Reid, D-NV, has been threatening to upend the Senates traditional filibuster mechanism and change the rule under which presidential nominees must receive 60 votes in order to be approved. Cordrays nomination to a full five-year term was approved...
The CFPBs final rule to integrate the consumer mortgage disclosures under the Real Estate Settlement Procedures Act and the Truth in Lending Act is now projected to be issued sometime in October, a month later than had previously been indicated, according to the bureaus semi-annual regulatory agenda update. The RESPA/TILA disclosure rule will be the last significant mortgage-related rulemaking as stipulated by the Dodd-Frank Wall Street Reform and Consumer Protection Act for the foreseeable future. All of the...
The New York State Department of Financial Services has directed FHA lenders to refrain from applying the FHAs higher mortgage insurance premiums in calculating a loans annual percentage rate and fully indexed rates for 60 days to prevent loans from becoming high cost or subprime. At the same time, the department issued guidance to conventional lenders on how to interpret existing provisions in state banking law regarding subprime loans. Statutory changes were made in 2009 to prevent some loans from becoming subprime, as defined by state law. Spikes in mortgage interest rates in the past few weeks plus ...
The Department of Veterans Affairs has urged holders and servicers of home loans with a VA guaranty to consider principal reduction when evaluating a distressed loan for possible modification. In a recent circular, the VA noted that it is not able to reimburse any principal reduction because a VA claim is payable only upon termination of a loan, and any forgiven amount is no longer part of the borrowers mortgage debt. However, principal reduction in a loan modification may produce a higher expected return for a servicer than termination of the loan, the VA said. This is especially true when the sum of the ...
Two different groups holding Fannie Mae and Freddie Mac stock filed suit against the government this week claiming that the Treasury Department and the Federal Housing Finance Agency are illegally poaching the profits from Fannie Mae and Freddie Mac that should go to shareholders. The FHFA and Treasury illegally implemented the so-called sweep amendment last summer that altered Fannies and Freddies preferred stock purchase agreements, according to the suits. The amended agreement allows the government to seize nearly all the profits of the two government-sponsored enterprises. This is a direct violation of the 2008 conservatorship legislation, according to the lawsuit filed by hedge fund Perry Capital in the U.S. District Court for the District of Columbia. Less than two days later, Fairholme Capital Management filed...
More sales of mortgage servicing rights are expected as a result of final Basel III capital rules approved by U.S. bank regulators over the past week. As anticipated, the Federal Reserve and other agencies declared that mortgage servicing rights cannot exceed 10 percent of Tier 1 capital or 15 percent when deferred tax assets are factored into the equation. As was originally proposed, any MSR amounts above 15 percent must be deducted from Tier 1 capital, and any amounts included in capital will carry a risk weight of 250 percent. Mortgage servicing rights were not given...