Although it’s still unclear when the Treasury Department will release its blueprint for resolving the epic conservatorships of Fannie Mae and Freddie Mac and reforming the housing-finance system, industry officials are sifting through the Trump administration’s tea leaves. One source who claims to be familiar with Treasury’s thinking on the matter said a consensus is developing around a model where the government-sponsored enterprises re-emerge as “utilities” with little or ...

The news at the Federal Reserve this week can best be summarized by the term “status quo.” The U.S. central bank held interest rates unchanged, its plan to gradually unwind its massive portfolio continues unchanged, and President Trump nominated Fed governor Jerome Powell to succeed Janet Yellen, likely ensuring more of the same when it comes to the future of both interest rates and the balance sheet. When it came to rates, the Federal Reserve’s Open Market Committee ...

There have been a number of moving parts in GSE shareholder cases recently, including oral arguments heard this week in one case and three separate lawsuits asking the Supreme Court of the United States to review the constitutionality of the structure of the Federal Housing Finance Agency. Attorney and managing partner David Thompson with Cooper & Kirk in Washington, D.C., who represents the shareholders in Christopher Roberts vs. FHFA, participated in this week’s oral arguments in the Seventh Circuit Court. He called the net-worth sweep unlawful because it imposed a “mandatory zero-capital regime and violated its own statutory commands to preserve and conserve assets and restore them to soundness.”

The Department of the Treasury, in the third of four reports related to an executive review of federal financial regulations, urged the Department of Housing and Urban Development to reconsider its use of disparate impact policy in the insurance industry. Released last week, the latest report focused on asset management and insurance and the regulatory structure of financial entities and products in each of these structures. Treasury called upon HUD to reevaluate its use of the ...

Nearly all of the securitized loans which failed to meet qualified-mortgage standards that took effect in 2014 are holding up well, and the MBS credit enhancement should be enough to handle any problems that emerge in an economic downtown, according to a new report from DBRS. The credit rating service did an analysis of the collateral and performance trends associated with the 20 securitizations backed by substantial numbers of non-QM loans that have been ... [Includes one data chart]

Banks tend to approve a much higher share of applications for jumbo mortgages than nonbanks, according to a new ranking and analysis by Inside Nonconforming Markets based on new Home Mortgage Disclosure Act data. In 2016, the denial rate for applications for jumbo mortgages was 18.6 percent. The rate tracks total loan applications for jumbo mortgages last year (495,213) and denied applications. The calculation excludes withdrawn applications and ... [Includes one data chart]

Brian Montgomery, President Trump’s nominee for assistant secretary for housing and FHA commissioner, reiterated his commitment to fight fraud and misrepresentation in FHA lending but wondered whether the Department of Justice had gone too far in using the False Claims Act as an enforcement tool against lenders. Testifying during his confirmation hearing before the Senate Committee on Banking, Housing and Urban Affairs, Montgomery expressed concern whether the DOJ and the Department of Housing and Urban Development had been adversarial towards lenders in their efforts to stem taxpayer losses and protect the FHA insurance fund. In prepared testimony, the nominee said the government must do better in providing clarity to encourage lenders to make FHA-insured loans and entice those that have exited for fear of exposure and liability to return to the ...

Overall denial rates for nonconventional loan applications (FHA, VA and Rural Housing Service) fell slightly in 2016 to 13.4 percent from 13.9 percent in 2015, Home Mortgage Disclosure Act data showed. In the nonconventional refinancing segment, denial rates rose to 32.9 percent last year from 30.3 percent in the previous year. Approximately 23.9 percent of FHA loan applicants were denied last year while VA turned down 20.0 percent of borrowers who sought a VA loan. An estimated 14.3 percent of FHA purchase-loan applicants were turned down. VA denied 11.4 percent of its purchase-mortgage applicants although its total purchase-loan applications are far fewer compared to FHA. According to the Federal Reserve’s overview of the 2016 HMDA data, as in past years, blacks, Hispanics and “other minority” borrowers had notably higher denial rates overall compared to white borrowers. Denial rates for ...

Nearly a dozen industry trade groups sent a letter Tuesday to every member of the U.S. House of Representatives, urging them to support legislative changes to loosen up the points-and-fees cap associated with the qualified-mortgage standard. The legislative vehicle of choice is the bipartisan H.R. 1153, the Mortgage Choice Act (not to be confused with the far more comprehensive, and controversial, Financial CHOICE Act). The measure was introduced in February by ...

JPMorgan Chase exhorted the CFPB to address some fundamental flaws in the integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act – namely, an insufficient capability for lenders to “cure” the inevitable errors that occur and the significant legal liability lenders and assignees face. As the lender spelled out in its public comments to the CFPB regarding its proposed solution to the TRID “black hole” (see following story), these are two significant hurdles that are keeping private capital from returning in full force to the mortgage market. Chase urged the bureau to address a number of unresolved concerns the industry has brought up since the rule was adopted, in order to foster stability and ...