Although flood insurance is required for Fannie Mae and Freddie Mac loans in designated flood areas, the recent hurricane activity in Houston and Florida has revealed that a number of borrowers didn’t have the coverage they were supposed to have. But getting to the root of the disconnect is complicated. Both government-sponsored enterprises said that it’s up to servicers to evaluate whether loans are in compliance with flood insurance requirements. But Fannie and Freddie said they also have their own systems in place to help ensure compliance. “Servicers are required...

Issuers of ABS are utilizing diverse structures to comply with the risk-retention requirements of the Dodd-Frank Act, according to a new sector commentary by analysts at Moody’s Investors Service. “Although securitization sponsors’ retention of portions of their own deals in general is credit positive … the rules have effectively just formalized prior common industry practices for many consumer ABS subsectors. This confirms our initial stance that the rules are only marginally credit positive for this sector,” said Vice President and Senior Analyst Yan Yan and Vice President and Senior Credit Officer Jingjing Dang. “That said, the methods of compliance that have emerged among ABS asset classes since the rules went into effect in December have varied.” Their first take-away is...

Rapid, aggressive refinancing of VA loans has made a comeback with some issuers using strategies to mask the practice and avoid possible penalties, including expulsion from the Ginnie Mae program, according to a top agency official. Responding to concerns raised by Sen. Elizabeth Warren, D-MA, Michael Bright, acting Ginnie Mae president and chief operations officer, said a joint Ginnie Mae/VA lender-abuse task force is analyzing monthly data and developing additional policy measures to deal with the problem. Bright confirmed the resurgence of inappropriate streamline refinancing in Ginnie securitization pools in recent weeks and has promised to crack down on the questionable practice. The problem surfaced last year when Ginnie Mae noticed unusually fast prepayment speeds in its mortgage-backed securities, particularly MBS backed by VA loans. Ginnie found that certain lenders and ...

The Mortgage Bankers Association has recommended steps to address the VA appraiser shortage and increased appraisal turn times. The industry group made its recommendations in a recent letter to Jeffrey London, executive director of the Department of Veterans Affairs’ Loan Guaranty Service, based on a roundtable discussion between MBA and other industry stakeholders in March. Stakeholders expressed their concern for the lack of VA appraisers and longer waiting periods for appraisal reports. Appraiser shortage is an ongoing problem for the VA, and has resulted in delayed loan closings, particularly in highly rural areas. Some states, like Oregon, have very few appraisers, the MBA pointed out.“This delay may force veterans to choose other loan programs to meet certain deadlines or face other adverse outcomes,” the MBA letter warned. On the other hand, the ...

The FHA will provide lenders that originate Home Equity Conversion Mortgage loans the option to view and print unsigned HECM counseling certificates in FHA Connection starting Sept. 18, 2017. While the lender may still take the initial loan application, the lender can only begin to process it once the counseling is complete, as evidenced by a completed HECM counseling certificate that contains signatures of both the counselor and borrower. Lenders that chose to use this option will be required to establish procedures to obtain and document authorization from the HECM borrower to access the counseling certificate in FHA Connection. In addition, lenders must certify that a borrower authorization to view the counseling certificate was obtained. Lenders must follow the guidance on processing HECM loans contained in the HUD Handbook, the FHA said. To access HECM counseling certificates, lenders will ...

An official from the CFPB confirmed late last week the agency is looking into the massive data breach at Equifax, widely seen as the most significant, and potentially most damaging, so far in the age of the Internet. A spokesman for the bureau told this newsletter, “The CFPB has authority over the consumer reporting industry, including supervisory and enforcement authority. The CFPB is authorized to take enforcement action against institutions engaged in unfair, deceptive or abusive acts or practices, or that otherwise violate federal consumer financial laws. We are looking into the data breach and Equifax’s response, but cannot comment further at this time.” However, it’s not just the occurrence of the breach that bothers the consumer regulator. As part ...

Members of Congress wasted no time getting to work on the CFPB when they returned to the nation’s capital last week after the Labor Day holiday. A subcommittee of the House Financial Services Committee held a hearing to consider a few legislative proposals to foster a more efficient federal financial regulatory regime, including a soon-to-be introduced TRID Improvement Act. Slated to be introduced by Rep. French Hill, R-AR, the TRID Improvement Act of 2017 would amend the Real Estate Settlement Procedures Act and the Truth in Lending Act to expand the period in which a creditor is allowed to cure a good-faith violation on a loan estimate or closing disclosure from 60 to 210 days after consummation. The bill also ...

The biggest mortgage lenders and the national industry trade groups have yet to formally submit comments to the CFPB regarding the bureau’s proposal that would close the so-called black hole associated with the agency’s integrated disclosure rule. But smaller players aren’t waiting around for the big dogs to weigh in and are expressing their support for the agency’s proposed solution. Monica Montgomery, head of mortgage compliance for Dubuque Bank & Trust, said she fully supports removing the four-business-day limit for providing closing disclosures for purposes of resetting tolerances and determining if an estimated closing cost was disclosed in good faith. “There are many circumstances where a closing is delayed beyond the control of the creditor after a CD had been ...

A complaint filed in late 2015 in U.S. District Court for the Central District of California in an attempt to initiate a class-action case against PHH Corp. and Realogy Holdings Corp. and some of their subsidiaries and affiliates has been brought to an end, after the defendants agreed to pay $17 million to resolve the dispute. PHH, Realogy and the other industry participants were accused of violating Section 8(a) of the Real Estate Settlement Procedures Act by allegedly “paying and receiving kickbacks, referral fees, or other things of value in connection with the referral of title insurance and other settlement services to Title Resource Group and its affiliates.” They also were accused of running PHH Home Loans as an improper ...

Ocwen Financial Corp. and Ocwen Loan Servicing recently agreed to pay a $1 million fine to resolve an issue of force-placed insurance (FPI) under the national mortgage settlement that was reached in 2014.At issue was the company’s performance as loan servicer as measured against one particular metric, metric 29, the purpose of which is to test whether Ocwen complied with the servicing standards regarding the timeliness of terminating FPI and refunding premiums to affected borrowers. Under the settlement, Ocwen must terminate FPI within 15 days of obtaining proof that a borrower has an existing insurance policy. As it turned out, Ocwen exceeded the mandated error threshold of 5 percent for Metric 29 during the first quarter of 2017, according ...