Mortgage lenders and appraisers widely agree that the appraisal process needs to be improved, as the industry faces a fresh wave of new federal regulations. During a conference sponsored this week by the Collateral Risk Network and the American Enterprise Institute, John Brenan, director of appraisal issues at The Appraisal Foundation, suggested that lenders have stymied appraiser efforts to change the process. You cant ignore the fact that the banking lobby is one of the strongest in the country, he said. Penny Reed, a vice president of strategic partner management at Wells Fargo Home Mortgage, acknowledged...
The Consumer Financial Protection Bureau has been feeling the heat over the size of its proposed rule to streamline and integrate the disclosures consumers get when taking out a home loan, so agency officials engaged in a little bit of push-back last week in an effort to fend off the criticism. The push-back started early in the week during a hearing of the House Small Business Committee, during which Rep. Scott Tipton, R-CO, took issue with the rulemakings size that exceeded 1,000 pages in draft form, a fraction of which is new...
American International Group, MGIC Investment, Genworth Financial and Radian Group have been served with subpoenas by the Consumer Financial Protection Bureau, the firms said in public filings last week, as the bureau is apparently probing to determine if the mortgage insurance companies transferred billions in M.I. premiums to the banks that made the mortgages. PHH Corp. made a similar disclosure back in January. The CFPBs subpoenas, known as Civil Investigative Demands, indicate that the bureaus enforcement...
The top priority in any effort to revamp, reform or otherwise reduce risk in the $1.8 trillion tri-party repurchase or repo market should be to clearly determine whos in charge from a federal perspective, according to a top Senate Democrat. In holding this weeks hearing of the Senate Banking Subcommittee on Securities, Insurance and Investment, Chairman Jack Reed, D-RI, said the government needs to defuse potential risk to the tri-party repo credit market for funding as an act of emergency preparedness rather than allow another financial crisis, such as what crippled the market in 2008. One of the lessons we learned...
In response to criticism that the Home Affordable Modification Program is susceptible to fraud, the Treasury Department recently established a fraud detection program with unprecedented penalties for the non-agency portion of HAMP. In certain circumstances, the Treasury will recapture any servicer, borrower or investor incentive payments, even for loan modifications completed before the new fraud detection program was announced. The process was detailed in HAMP Supplemental Directive 12-04. The Treasury said it hired ...
A large-scale refinance program proposed by Sen. Jeff Merkley, D-OR, would rely on a risk transfer fee for lenders and require participating lenders to consider all potential borrowers for the program. The Rebuilding American Homeownership program has support from the Obama administration, though analysts suggest approval from Congress is unlikely. Merkley recently proposed the RAH program to help virtually all non-delinquent borrowers with negative equity to refinance into a mortgage with a lower interest rate. The program could be based on a one-time federally-backed structure, similar to the Home Owners Loan Corp. established by the federal government during the Great Depression. The RAH trust would sell...
One of the many concerns mortgage lenders have with the powerful and still largely untested Consumer Financial Protection Bureau is the expanded standard of unfair, deceptive and abusive acts and practices created by the Dodd-Frank Act and how the CFPB is going to enforce it. Unfortunately, theyre more likely to learn about it on the fly during the examination process than they are in advance through careful, formal rulemaking or supervisory guidance, according to one of the presenters during an Inside Mortgage Finance webinar last week on the CFPBs regulatory and supervisory landscape. What I think youre seeing develop here is examination beyond regulation, and the CFPBs examination authority and supervision authority goes beyond...
Consumer Financial Protection Bureau Director Richard Cordray this week sought to allay the concerns of some members of Congress that small businesses in the mortgage industry and other sectors are about to be overwhelmed by regulatory overload. One of the main issues in this regard being considered by the House Small Business Committee is the CFPBs recent proposal to integrate and simplify the consumer disclosures mandated by the Truth in Lending Act and the Real Estate Settlement Procedures Act. Our committee is interested in how the regulations will affect...
Californias San Bernardino County Board of Supervisors has yet to decide if it wants to go ahead with a controversial proposal to seize performing underwater non-agency mortgages via eminent domain, repackage them and sell them to new investors. But just the fact theyre considering it has compelled some secondary mortgage market representatives to call in the big guns of the federal government to squash the notion. Late last week, Securities Industry and Financial Markets Association President and CEO Tim Ryan wrote to Treasury Secretary Tim Geithner, Federal Reserve Chairman Ben Bernanke, and Department of Housing and Urban Development Secretary Shaun Donovan to raise his memberships concerns about the proposal and called on them to oppose it. We believe that efforts by municipalities to employ the power of eminent domain to seize mortgage loans are...
Compliance management, consumer complaints, fair lending and unfair, deceptive business practices will receive the most scrutiny during supervisory exams of large banks and nonbank financial institutions, according to the Consumer Financial Protection Bureau. Lenders should reevaluate their current policies and procedures for consumer protection even before they are selected for a comprehensive audit by the CFPB, suggested Allison Brown, program manager for mortgage supervision within the bureaus Office of Nonbank Supervision. Penalties for noncompliance are unclear but noncompliant institutions will be required...