As the wait for the highly anticipated qualified mortgage final rule continues, its impact on FHA lending programs remains uncertain. Concerns have been raised over the possibility that the final QM rule the Consumer Financial Protection Bureau is finalizing may establish a safe harbor for prime loans with a maximum debt-to-income ratio of up to 43 percent. This could have implications for FHA loans, which allow higher back-end ratios under certain circumstances, according to some lenders and industry participants. At what point the DTI ratios will ...
The latest CFPB-related work plan of the Federal Reserve Office of Inspector General indicates the OIG is working on an evaluation of the bureaus annual budget process, a political flash point on Capitol Hill for Republican critics and opponents of the agency. As an independent agency within the Federal Reserve System, the CFPB is funded principally by the Federal Reserve System in amounts determined by the CFPB director as necessary to carry out the agencys operations, subject to limits established in the...
The mortgage servicing rule proposed earlier this year by the Consumer Financial Protection Bureau could easily be exploited to bring any foreclosure proceeding to a grinding halt, according to a leading mortgage industry attorney. If the rule is promulgated as currently written, that could cause mortgage lenders, who are already skittish about future losses, buyback demands and a host of other pending regulations, to pull back even further when it comes to providing mortgage credit. The consequence of these regulations is to create...
Some mortgage lenders will be able to develop and test, on a limited basis, their own consumer disclosures, under a proposed policy issued last week by the Consumer Financial Protection Bureau. The disclosures would have to be approved by the bureau before being used. The bureau believes that there may be significant opportunities to enhance consumer protection by facilitating innovation in financial products and services and enabling companies to research informative, cost-effective disclosures, the CFPB said. The bureau also recognizes that in-market testing, involving companies and consumers in real world situations, may offer particularly valuable information with which to improve disclosure rules and model forms. The Dodd-Frank Act gave...
Two separate white papers from industry trade groups on reform of the government-sponsored enterprises call for a strong government role to provide stability and liquidity in multifamily mortgage finance. The Mortgage Bankers Association called for a system of private capital finance for multifamily housing, with a focus primarily on securitization and the federal government serving as a catastrophic insurer. The program would be funded through risk-based premiums paid by the entities that securitize the loans, according to Brian Stoffers, president of CBRE Debt and Equity Finance. We recognize...
Democrats are making another attempt to require the forgiveness of principal on delinquent mortgages guaranteed by Fannie Mae and Freddie Mac as the White House and lawmakers are in talks to avoid the pending fiscal cliff. This week a group of 18 House Democrats dispatched a letter to President Obama and congressional leaders of both parties urging them to expand assistance to borrowers as part of any tax increase and spending cut resolution package. Given the clear benefits of providing assistance to underwater borrowers, as well as the significant savings for the American taxpayers, we believe that provisions expanding such assistance should be part of any deal to resolve the fiscal cliff, the members wrote. At a minimum, such legislation should require that Fannie Mae and Freddie Mac offer principal reduction loan modifications to borrowers who are net present value positive.
Fair lending enforcement moved to a new level last week when the CFPB and the Department of Justice signed an agreement to strengthen the coordination of their efforts in this regard as well as to avoid duplication. The good news for the industry is any effort to reduce government duplication could similarly reduce lenders compliance burden. Under the memorandum of understanding the agencies signed, the CFPB and Justice will meet regularly on investigations and establish strict confidentiality for shared information...
As anxious as mortgage lenders are about the apparent delay in the CFPBs issuance of an ability-to-repay/qualified-mortgage final rule, industry attorneys, trade group experts and consumer advocates unanimously believe that bureau is taking so much time so it can put out the best, most balanced rule as possible. Carrie Hunt, general counsel and vice president of regulatory affairs for the National Association of Federal Credit Unions, said she isnt as concerned about when the rule comes as she is about the quality of it...
In a development that might catch the attention of officials at the CFPB who are working on improving consumer disclosures under the Real Estate Settlement and Procedures Act and the Truth In Lending Act, more evidence has emerged that consumers arent very big on using TILA forms to comparison shop for mortgages.A new study from Fannie Mae found that nearly half of lower‐income respondents and more than a third of higher‐income respondents get quotes from only one mortgage lender. The survey also confirms findings in other reports that a substantial portion of all consumers do not understand key mortgage elements.
A close comparative look at the stimulus activity of the Federal Reserve suggests its support of the MBS market delivers more bang for the buck to the overall U.S. economy than its purchase of Treasury securities, according to a top Fed official. [B]uying MBS has a different effect on the constellation of credit-market rates than buying Treasury securities, Fed Governor Jeremy Stein said in a speech. Taking a look at what happened in the credit markets in the wake of the Fed Open Market Committees Sept. 13 announcement of a new program to purchase an additional $40 billion a month of agency MBS, Stein found...