The mortgage industry and supporters on Capitol Hill are keeping up the heat on the CFPB, 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. David Stevens, president and CEO of the Mortgage Bankers Association, said recently: “As one who believes that the bureau has done a lot of good work, it is a phenomenon to me that the simple request for clarity to specific questions we have submitted, amidst the clear and fact-based challenges facing responsible lending in its focus on efforts to be compliant, is being met with such resistance.” According to the MBA chief, this isn’t just lenders bellyaching. “This is ...

According to recent interviews, problems persist in the secondary mortgage market because certain jumbo investors won’t buy loans even if there’s just one, minor TRID error. At least one lender – W.J. Bradley Mortgage in Colorado – has closed (in part) because of TRID-related snafus tied to jumbo loan sales. Meanwhile, there’s new speculation that as many as four more lenders, all nonbanks, are contemplating filing for bankruptcy protection because non-agency product is stuck on their warehouse lines. No names have been mentioned so far, and it could be that talk of bankruptcy protection is premature and being looked at as a last resort. On the other hand, the secondary market for TRID “scratch-and-dent” loans is “still going fast and furious,” said ...

Respondents to a recent survey conducted by Campbell Surveys and sponsored by Inside Mortgage Finance, an affiliated newsletter, provided a down-in-the-trenches perspective on broader conceptual and philosophical concerns trade group officials in Washington, DC, often talk about when it comes to the CFPB’s integrated disclosure rule. Survey respondents were asked about the effect TRID was having on their closings. Some representative comments follow: On confidentiality issues, one agent said, “I do not like TRID at all. The closing disclosures cannot be shared. How can we as agents verify all information is correct? Buyers’ agents cannot verify before closing that their commission is correct as well. It’s a complete mess on all ends.” Another agent said, “The biggest problem with TRID ...

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 ...

Nonbank mortgage servicers could find themselves subject to more thorough registration requirements or greater data reporting mandates – or both – after the Government Accountability Office concluded that the CFPB does not have all the information it needs to oversee all such entities. “CFPB directly oversees nonbank servicers as part of its responsibility to help ensure compliance with federal laws governing mortgage lending and consumer financial protection,” GAO said in a new report. “However, CFPB does not have a mechanism to develop a comprehensive list of nonbank servicers and, therefore, does not have a full record of entities under its purview. As a result, CFPB may not be able to comprehensively enforce compliance with consumer financial laws.” According to the government watchdog ...

Former Federal Trade Commission official Todd Zywicki had a blunt message for the U.S. Senate Banking, Housing and Urban Affairs Committee recently when it comes to the CFPB and its voluminous new mortgage rules: Many smaller banks have simply chosen to exit the residential finance sector rather than bear the increased regulatory costs and risks. The former director of policy planning at the FTC cited a survey conducted by George Mason University’s Mercatus Center which found “64 percent of small banks reported that they were making changes to their mortgage offerings because of [the] Dodd-Frank [Act], and 15 percent said that they had either exited or were considering exiting residential mortgage markets entirely.” Also, almost 60 percent of small banks ...

Many mortgage industry attorneys seem convinced that PHH Corp. will succeed – at least at the appellate court level – in defying the CFPB in its ongoing legal dispute with the bureau. The crux of the dispute is the bureau’s assertion that PHH violated the Real Estate Settlement Procedures Act and harmed consumers through a mortgage insurance kickback scheme tied to a captive MI. Last week, the U.S. Court of Appeals for the District of Columbia heard oral arguments in the case, PHH Corp. v CFPB, and the day did not go well for the bureau. Former CFPB enforcement attorney Jennifer Lee, now a partner with the Dorsey & Whitney law firm in Washington, DC, succinctly summarized the tough day the bureau ...

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...

Approximately 300 FHA lenders are seeing their recertifications held up because they failed to report in a timely manner events or changes that may affect their eligibility to participate in FHA programs.Delays are occurring because lenders have failed to notify the FHA of material events as soon as they have occurred and waited until the annual recertification to report them, according to industry sources. Under rules of the Department of Housing and Urban Development, a notice of material event alerts the agency to a significant change to the information provided by the lender at application that may affect its status as an FHA-approved lender. The department strongly encourages lenders to notify FHA within 10 days of the event to prevent delays during the annual recertification. Each FHA lender must complete the annual recertification process in order to retain its FHA approval. Lenders must ...