The number of major fair lending settlements brought by federal regulators over the last year highlights the increasing importance of mortgage lenders properly evaluating their risk of being out of compliance and responding appropriately and preemptively, according to top banking agency officials. Since November 2011, the Department of Justice has settled seven fair lending cases against Bank of America, Countrywide Financial, GFI Mortgage Bankers, Luther Burbank Savings, Mortgage Guaranty Insurance Corp., SunTrust Mortgage, and Wells Fargo mostly related to steering, pricing and underwriting. In the aggregate, these settlements have produced more than $550 million in monetary relief in compensation for more than 250,000 victims, according to Jon Seward, head of housing and civil enforcement for the Justice Department. All seven cases resulted from referrals as the regulators are...
Federal banking regulators, striving to keep their bank oversight current with international regulators through the adoption of the Basel III capitalization standards, are facing growing domestic resistance, including that of some of their state-based counterparts, who are concerned about the impact on mortgage assets. Greg Gonzales, chairman of the Conference of State Bank Supervisors, said last week that the organization strongly supports federal banking agencies efforts to improve capital standards internationally and for systemic institutions, but is opposed to their proposed approach to implement the Basel III capital accord and to incorporate a standardized approach for risk-weighted assets. As bank supervisors, we believe...
While President Barack Obama and his Republican challenger, Gov. Mitt Romney, differ widely on key issues, both candidates appear to agree on the need to reduce the governments role in housing and bring private capital back to the mortgage market, industry observers say. Nothing much has been said in public forums or in the first presidential debate (except for a brief mention of the qualified mortgage proposal) about the housing issue, but observers say their positions on FHA may not be far apart. Obamas approach to the housing crisis is ...
Portfolio lenders held to a cautious strategy for home-equity lending during the first half of 2012, with most companies not doing enough new business to offset runoff in their retained holdings, according to a new Inside Mortgage Finance ranking and analysis. But several large lenders reported significant increases in HEL originations during the second quarter, and some institutions managed to originate enough new business to increase their retained portfolios. The credit union sector continued to show more enthusiasm for the business than commercial banks and savings institutions. As of the end of June, banks, thrifts and credit unions held...[Includes three data charts]
The zero-zero requirement in the loan originator compensation proposed rule pending at the Consumer Financial Protection Bureau could inadvertently steer borrowers into more expensive mortgage loans, according to a top industry official. There is absolutely no doubt that forcing a zero-zero option is going to result in higher-priced loans, said David Stevens, president and CEO of the Mortgage Bankers Association, during an Inside Mortgage Finance webinar this week. Premium [loans] dont get the same kind of multiple as a current coupon. So as the yield curve shifts and we see rates move, were going to see action that is going to make these numbers move around a lot. To give a more extreme example, if we have an interest-rate rally, you can drop...
The MBS market widely embraced the Federal Reserves decision to increase its holdings of agency MBS by $40 billion per month until job growth improves significantly, but some observers are questioning the long-term costs and effectiveness of the strategy. Mortgage Bankers Association Chief Economist Jay Brinkman said that the Fed plan is a way to inject more money into the economy, while noting that the purchase of the no-risk, lower-yielding assets is designed to force investors to expand their risk appetite. The idea is that if the Fed steps in and buys up some of these safe-haven assets, that is going to force people to go out and invest more and take on more risk, he said during an MBA conference in Washington, DC, this week. This approach is actually turning...
The Federal Reserves decision to keep interest rates low until the U.S. economy creates a significant increase in employment will help banks continue to enjoy solid earnings from their mortgage banking activities, according to analysts at Credit Suisse. The Fed is increasing its already huge portfolio of agency mortgage-backed securities by $40 billion a month. Along with the $25 billion a month the central bank has been buying to replace principal paydown, the Feds total MBS acquisitions ...
The Consumer Financial Protection Bureau has been discreetly broadening its influence on statutory and regulatory interpretations through its largely unannounced filing of amicus curiae briefs in a handful of important cases brought by private litigants, according to an analysis of the CFPBs legal activity by two leading industry attorneys.Since December 2011, the bureau has filed six such friend-of-the-court briefs in federal appellate cases, always assuming the role of steadfast consumer advocate, according to a review of the briefs by Arthur Axelson and Jeffrey Jamison, senior counsel and associate, respectively, with the Dykema law firm. In fact, in several of its amicus curiae briefs, the CFPB has even sought to reverse a general consensus among the federal appellate courts, the pair noted. In Birster v. American Home Mortgage Services, Inc., filed Dec. 21, 2011, in the 11th Circuit Court of Appeals, the question of interest to the bureau was whether activity surrounding foreclosure is immune from the Fair Debt Collection Practices Act. The CFPB argued that it is not. In Marx v. General Revenue Corp., filed Jan. 26, 2012, in the 10th Circuit Court of Appeals, there were...
The Federal Reserve is launching its aggressive new campaign to boost economic growth by gobbling up the lions share of new agency MBS production in a stagnant market. The volume of outstanding single-family agency MBS grew by just $651 million during the second quarter of 2012, according to a new Inside MBS & ABS analysis. At $5.382 trillion, the agency MBS market at the end of June was down 0.5 percent from the same point in 2011. Because the non-agency MBS market is...[Includes two data charts]
The third and latest round of quantitative easing rolled out earlier this month by the Federal Reserve will sweeten MBS demand far above supply, but it will ultimately provide only a negligible boost to mortgage refinance activity, analysts say. The Federal Open Market Committee announced QE3 on Sept. 13, making a commitment to buy an additional $40 billion in agency MBS a month and saying that it would continue buying if the outlook for the labor market does not improve substantially. The New York Fed has been buying about $27.9 billion of agency MBS per month since October 2011 in an effort to reinvest principal payments from its MBS holdings back into the mortgage securities market. An analysis by Bank of America Merrill Lynch this week found...