Kroll Bond Rating Agency warned recently that it might refuse to rate certain non-agency mortgage- backed securities subject to the TRID mortgage disclosure rule until the CFPB issues formal guidance.The rating service said it’s currently unclear whether certain corrections of errors under the bureau’s integrated disclosure rule will subject non-agency MBS investors to assignee liability. This is an issue that the Structured Finance Industry Group continues to work on, with SFIG also stressing that formal guidance from the CFPB is necessary. “In instances where these violations go un-corrected by an originator, KBRA believes the risks associated with TRID-eligible loans, in material concentration, become more significant and that KBRA may consider additional credit enhancement, applying a rating cap, or declining ...

Fannie Mae and Freddie Mac are not conducting loan-level reviews for compliance with the CFPB’s integrated disclosure, and that threatens investors in the pair’s future credit-risk transfer transactions with the possibility of some modest losses because of lender compliance violations, according to a recent report from Moody’s Investor Service. “We expect overall losses on these transactions owing to TRID violations to be fairly small, despite our expectations that the frequency of violations will be high, at least initially,” analysts at the rating service said. “Furthermore, lender representations and warranties and the government-sponsored enterprises’ ability to remove defective loans from the transactions will likely mitigate some of these losses.” Damages for TRID violations are less significant for a securitization transaction compared ...

Two rating services published reports in recent days stressing that non-agency MBS with loans subject to TRID mortgage disclosures can be rated, even when the loans have TRID violations. The reports are part of an industry effort to deal with the rule that combines disclosure requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act that was promulgated by the Consumer Financial Protection Bureau and took effect in October. Kroll Bond Rating Agency and Morningstar Credit Ratings published separate reports in the past week stating expectations that TRID will have a “limited” impact on non-agency MBS investors. A number of other rating services have made similar statements since TRID took effect, though that has done little to spur issuance. Only one non-agency MBS with TRID loans has been issued...

With Fannie Mae and Freddie Mac doing only surface checks for TRID regulatory compliance and not complete reviews, future credit-risk transfer deals from the two government-sponsored enterprises could be at risk from lender compliance violations, according to Moody’s Investors Service. Numerous challenges have arisen in the non-agency secondary market because of concerns about liability for errors in the new mortgage disclosures. But since TRID became effective on Oct. 3, 2015, Fannie and Freddie are only checking to make sure that the correct forms are being used. This lack of diligence for TRID violations may amount...

Over the past two years, PHH Corp. has lost $64 million on its mortgage business and now that Merrill Lynch has given notice that it wants to end some of its private-label contracts with PHH Mortgage, the nonbank’s future is beginning to look cloudier. Moreover, analysts and investors who follow the company wonder whether PHH’s private-label model – the bread and butter of its origination business – is fixable in the modern era of mortgage banking. Meanwhile, all of this is happening at a time when management hopes to sell the company, or at least field offers for some of its key assets, including a $226 billion servicing portfolio. The bad news for PHH started...

Mortgage originators, securitizers and investors are no closer to getting any additional formal guidance from the Consumer Financial Protection Bureau when it comes to industry compliance with the agency’s controversial integrated disclosure rule. The rule, which took effect Oct. 3, 2015, combines the consumer disclosures required under the Truth in Lending Act and the Real Estate Settlement Procedures Act. During a hearing late last week before the Senate Banking, Housing and Urban Affairs Committee, CFPB Director Richard Cordray and Sen. Bob Corker, R-TN, briefly referenced...

As the non-conforming secondary market continues to grapple with headaches surrounding TRID errors and scotched jumbo deals, another storm may be brewing: whether Fannie Mae and Freddie Mac are buying loans that – if tested properly for violations – would reveal flaws. The good news for the lending industry is that the government-sponsored enterprises are not now conducting routine post-purchase file reviews for technical compliance for TRID errors. The GSEs now are just checking to make sure the new consumer disclosures, which merge the requirements of the Truth in Lending Act and the Real Estate Settlement Procedures Act, are being used. Still, that has not prevented...

The Association of Mortgage Investors last week urged the Consumer Financial Protection Bureau to address ongoing issues raised by the so-called TRID mortgage disclosure rule. “The recent evidence is that the rule, while extremely well-intentioned, has resulted in a climate of legal uncertainty and is chilling private investment in the U.S. mortgage market,” Chris Katopis, executive director of the AMI, wrote to CFPB Director Richard Cordray. The rule took effect...

The mortgage industry is keeping the heat on the Consumer Financial Protection Bureau, urging the powerful consumer regulator to issue official guidance on TRID disclosure errors and assignee liability as problems continue to plague the non-agency secondary market. According to interviews conducted by Inside Mortgage Finance over the past several weeks, problems persist in the secondary because certain jumbo investors won’t buy loans even if there’s just one, minor TRID error...

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...