Lenders are getting more comfortable with originating non-qualified mortgages, particularly as opportunities to complete refinances decline. Non-QMs accounted for 14.0 percent of mortgages originated by 159 banks in 2015, up from a 10.0 percent share of originations the previous year, according to a survey by the American Bankers Association. “More banks are adjusting underwriting criteria to target selected non-QM loan opportunities,” the trade group said. The ABA found...

Caliber Home Loans recently loosened the standards for one of its non-qualified mortgage products. The lender’s “Fresh Start” mortgage now allows loan-to-value ratios up to 85.0 percent, up from 80.0 percent. And private mortgage insurance isn’t...[Includes five briefs]

Like the rest of the industry, the small but growing nonprime sector has struggled with the integrated disclosure rule known as TRID, but for the most part such lenders have adjusted and are now seeing a noticeable increase in both applications and production. At least that’s the view of two of the largest players in the market: Angel Oak Mortgage Solutions, Atlanta, and Citadel Servicing Corp., Irvine, CA. Each firm now expects to fund between $800 million and $850 million this year. They did...

The CFPB should consider increasing the asset threshold limit to be considered a “small creditor” under its ability-to-repay/qualified mortgage rule, from $2 billion to $10 billion, so that more small lenders may take advantage of the regulatory relief a recent interim final rule provides, according to the American Bankers Association. The interim final rule, which was issued March 25, 2016, expanded the availability of certain special provisions for small lenders operating in rural or underserved areas. The proposal amends some of the definitions in the ATR rule, as per the Helping Expand Lending Practices in Rural Communities Act of 2015, which was enacted Dec. 4, 2015. Under the interim rule, small creditors – or banks that made no more than 2,000 ...

Two years after the Consumer Financial Protection Bureau’s ability-to-repay (ATR) rule went into effect, residential mortgage servicers have yet to see borrower claims being brought, according to a new report from Fitch Ratings. However, Fitch says the landscape could change as certain non-qualified mortgage loans become more common. But for now, the lack of borrower claims is not surprising, the report said. Most loans, including those eligible for purchase by Fannie Mae and Freddie Mac, meet...

Over the past year, The Blackstone Group has been aggressively expanding into many facets of the mortgage business and is now ready to make what might be considered a bold move: investing and originating in residential loans that don’t meet the qualified-mortgage test. But just how big might Blackstone get? That’s hard to say at this point. A source inside the company, who spoke under the condition his name not be used, confirmed...

Mortgage lending allies, free-market advocates and Congressional critics of the Consumer Financial Protection Bureau this week took issue with some of the CFPB’s most significant mortgage rules and its use of regulatory enforcement actions to establish policy they said would be more appropriately set in the traditional public notice and comment process. Former Federal Trade Commission official Todd Zywicki, now a law professor at George Mason University, told members of the Senate Banking, Housing and Urban Affairs Committee that many smaller banks have chosen to exit the mortgage market rather than bear the regulatory cost and risk associated with complying with the numerous mortgage regulations promulgated by the CFPB. Citing a survey of small banks conducted by GMU’s Mercatus Center, Zywicki said...

In response to the recent enactment of federal legislation, the CFPB recently issued an interim final rule that broadens the availability of certain “qualified mortgage” special provisions under the ability-to-repay rule for small lenders that operate in rural or underserved areas. The new rule, which kicked in March 31, 2016, implements the Helping Expand Lending Practices in Rural Communities (HELP) Act, legislation that allows more small creditors operating in rural or underserved areas to offer balloon-payment QM loans and balloon-payment high-cost mortgages, and makes them eligible for the escrow exemption. Prior to the HELP Act, a small lender was only eligible for these provisions if it operated predominantly in rural or underserved areas. The bureau’s prior rules had interpreted that ...

Fannie Mae and Freddie Mac purchased $127.7 billion of single-family loans last year that failed to meet the baseline qualified-mortgage standard set by the Consumer Financial Protection Bureau, according to a new analysis by Inside The GSEs. Under the agency’s ability to repay rule, the GSEs can ignore the restriction that qualified mortgages must have a debt-to-income ratio of 43 percent or less. This so-called agency “patch” was set up to last for seven years, or until 2021, as long as Fannie and Freddie remain in conservatorship or receivership. In other regards, such as the 30-year limit on maximum loan term and the prohibition on interest-only payments, the GSEs...

The Department of Veterans Affairs has issued additional lender guidance for dealing with the public water contamination problem in Flint, MI. The guidance expands on the agency’s minimum requirements for properties backed by VA loans. The guidance refers to policy in the VA Lender’s Handbook which requires properties to have “a continuing supply of safe and potable water for drinking and other household uses,” before being approved for a VA-backed home loan. In the VA’s view, safe and potable water also refers to water used for bathing, showering and sanitary uses. Properties not in compliance with this requirement will not be eligible for the VA guaranty. Proper mitigation of lead-contaminated water must include a central filtering system that is acceptable to local health authorities and that can provide safe and potable water. Appraisers must comment and adjust for any ...