Some experts are predicting that the new ability-to-repay rule issued by the Consumer Financial Protection Bureau, which sets the boundaries of qualified mortgages, will also lead some lenders to focus on so-called non-QM loans that will become the new subprime market. At the American Bankers Associations regulatory compliance conference, held this week in Chicago, ABA Senior Regulatory Counsel Rodrigo Alba said publicly what many mortgage bankers have been thinking privately. Responding to a comment from one banker who said her institution might opt to do only non-QM lending, just for simplicitys sake, Alba said, Wanted or not, this may start leaning into being the new subprime. He added...
Changes to the FHAs mortgage insurance premium cancellation policy, which take effect on June 3, could ultimately cause some FHA loans closed after the effective date to become a higher-priced mortgage loan that no investor would want to purchase, lenders warned. Eliminating the MIP cancellation and requiring insurance to be kept for the life of the mortgage loan will raise the annual percentage rate 150 basis points above the average prime offer rate (APOR) index. This will trigger a higher-priced mortgage loan (HPML) designation for some ...
The Department of Housing and Urban Development has announced plans to consolidate multifamily hubs nationwide and close a number of its smaller field offices. The plan would result in an estimated $61.9 million in annual costs savings for HUD after completion and affect approximately 900 of the departments 9,300 employees. No employee will be laid off as a result of the restructuring, according to HUD Secretary Shaun Donovan. Donovan said the changes are part of a broader, long-term effort that will allow HUD to continue to deliver high-quality services by adapting modern best practices. The decision to ...
Borrowers rushing to get their purchase-mortgage applications submitted before FHAs higher annual mortgage insurance premiums took hold April 1 helped boost total purchase applications last week, according to the latest data from the Mortgage Bankers Association. The MBAs weekly mortgage applications survey for the week ending March 29 showed a surge in purchase applications for government loans. The surge, fueled mostly by FHA applicants, helped boost the total number of purchase applications received by lenders during the period. Total purchase applications increased last week, due to an almost ...
A number of industry representatives are calling on the Consumer Financial Protection Bureau to carefully test its pending integrated consumer disclosure forms under the Truth in Lending Act and Real Estate Settlement Procedures Act before they are actually put into use. At issue is the CFPBs proposal to conduct quantitative testing in fiscal years 2013 and 2014 of the performance of the current disclosures versus the proposed disclosures forthcoming later this year. In 2008, the Department of Housing and Urban Development finalized...
The National Association of Federal Credit Unions urged the CFPB to make sure the bureaus integrated disclosures on mortgage loans under the Truth in Lending Act and Real Estate Settlement Procedures Act are useful to consumers and impose as little burden as possible on credit unions. NAFCU Senior Regulatory Affairs Counsel Tessema Tefferi wrote to the CFPB about its proposal to conduct quantitative testing in fiscal years 2013 and 2014 of the performance of the current vs. proposed disclosures. NAFCU lodged serious concerns...
A number of mortgage industry experts share the view that a dark cloud has been cast over President Obamas recess appointment of Richard Cordray as director of the Consumer Financial Protection Bureau, after an appeals court ruled late last week that other recess appointments the president made at the same time were unconstitutional. The significance of this decision cannot be overstated as it raises a host of questions about the potential impact of a judicial ruling that Mr. Cordrays recess appointment was similarly invalid, said Barbara Mishkin, of counsel with the law firm of Ballard Spahr. Edward Mills, a financial policy analyst at FBR Capital Markets, said...
The CFPB has responded to a variety of mortgage appraisal issues on two different fronts, publishing a final rule all its own in conjunction with the Equal Credit Opportunity Act, and participating in an interagency rulemaking in the context of the Truth in Lending Act. On the ECOA front, the bureau issued a final rule that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates, although a lender generally may still charge the consumer a reasonable fee for the cost of conducting the appraisal or other estimate. In essence, then, a lender can charge...
The Consumer Financial Protection Bureau followed another mandate from the Dodd-Frank Act late last week, promulgating a final rule that requires mortgage lenders to provide applicants with free copies of all appraisals and other home-value estimates, and to inform consumers within three days of receiving an application for a loan of their right to receive copies of all appraisals. An applicant may waive the timing requirement for providing these copies, but must be given a copy of all appraisals and other written valuations at or prior to closing or account opening or, if the transaction is not consummated, within 30 days after the creditor makes a decision. While the rule prohibits...
The CFPB issued a final rule it inherited from the Federal Reserve that generally extends the current required duration of an escrow account on certain higher-priced mortgage loans from a minimum of one year to a minimum of five years. To preserve access to credit, the rule creates an exemption from the escrow requirement for small creditors that operate predominately in rural or underserved areas.Specifically, to be eligible for the exemption, a creditor must:make more than half of its first-lien mortgages in rural or...