The U.S. Department of Agriculture-Rural Housing Service has proposed to revise regulations for the single-family housing guaranteed loan program pertaining to qualified-mortgage (QM) requirements, refinancing, principal reduction and lender indemnification. The deadline for comments is May 4, 2015.The RHS is proposing to amend its regulations to indicate that a loan with an RHS guarantee is a qualified mortgage if it meets certain requirements set by the Consumer Financial Protection Bureau. The CFPB published a QM rule, which became effective on Jan. 10, 2014. Among other things, the rule requires creditors to make a reasonable, good faith determination of a borrower’s ability to repay the mortgage loan. In addition, the rule establishes a safe harbor from liability for transactions that meet the QM requirements or, in certain cases, a rebuttable presumption of ...

Consumer advocates and attorneys are urging the Department of Housing and Urban Development to delay the implementation of a new policy that purports to provide relief to surviving spouses of reverse-mortgage borrowers and to find solutions that are more effective. The group said the policy HUD announced in Mortgagee Letter 2015-03 on Jan. 29 is so restrictive that virtually all surviving non-borrowing spouses will get no relief. A letter to the agency, drafted by the National Consumer Law Center and signed by the Consumers Union, California Reinvestment Coalition, National Housing Law Project, Housing and Economic Rights Advocates and Institute on Aging denounced the new policy. They said most surviving spouses of deceased borrowers of Home Equity Conversion Mortgage loans will not be able to meet the policy’s stringent guidelines and will ...

The FHA’s request for authority to require specialized subservicing in certain circumstances could be included in an appropriations bill rather than in housing-related legislation, according to Sen. Jack Reed, D-RI, ranking minority member of the Senate Appropriations Subcommittee on Transportation, HUD and other Related Agencies. Reed raised the possibility during a recent hearing on the Department of Housing and Urban Development’s FY 2016 budget proposal. Among other things, the FHA has been seeking authority from Congress to require, in individual cases, inexperienced lender/servicers to transfer the function to a specialized servicer to better assist borrowers and reduce losses to the Mutual Mortgage Insurance Fund. Allowing the FHA to require transfer of servicing will help more distressed homeowners stay in their homes and avoid foreclosure, said ...

The dispute around an $8.5 billion settlement between Bank of America and non-agency MBS investors may be at an end after a New York state appeals court signed off on the deal. The agreement would mean a quick end to a lengthy legal battle over a settlement that was first announced on June 28, 2011. It also means the agreement could become the template for all representations-and-warranties settlements with large institutional investors, analysts said. BofA agreed...

The U.S. Supreme Court this week dealt a heavy blow to the mortgage industry, holding that the Department of Labor’s most recent regulatory interpretation is valid, meaning mortgage loan officers are eligible for overtime pay. The DOL went back and forth, through formal rulemaking and regulator interpretations, on whether loan officers should be exempt. At one point, it said lenders did not have to pay LOs overtime because they fit in the so-called administrative exemption. But in its most recent position, a 2010 opinion letter, the agency said loan officers are not exempt from the protections of the Fair Labor Standards Act, including overtime pay. The Mortgage Bankers Association challenged...

There might be the usual hard line posturing on the part of both major political parties in the U.S. Congress on display when it comes to legislation related to the CFPB. But behind the scenes, top industry officials have no intention of letting up on the pressure they are trying to bring to bear on lawmakers to pass as many practical changes to bureau rulemakings as possible. “In the next two weeks, there will be several bills introduced dealing with less controversial but important elements of regulatory reform that we think will have bipartisan support,” said one mortgage industry executive in Washington, DC. Bills are expected to include provisions such as providing “qualified mortgage” status for many portfolio loans, with ...

A key take-away from last week’s hearing of the House Financial Services Committee was a clear indication that the CFPB plans to fully enforce its integrated disclosure rule when the Aug. 1, 2015, effective date kicks in. The rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act was finalized in November 2013. During the hearing this past Tuesday, Reps. Randy Neugebauer, R-TX, and Brad Sherman, D-CA, both pressed CFPB Director Richard Cordray on whether he would be open to a 60-day enforcement delay or a “restrained enforcement” period when the TILA/RESPA integrated disclosure rule – the TRID – goes live. Cordray did not come right out and say he would refuse to accept or implement one, but ...

The CFPB can do a better job when it comes to diversity and inclusion, according to a new report issued by the bureau’s Office of Inspector General. The CFPB has taken steps to foster a diverse and inclusive workforce since it began operations in July 2011, the OIG began. But it identified four areas of the bureau’s diversity and inclusion efforts that can be enhanced. “First, diversity and inclusion training is not mandatory for CFPB employees, supervisors and senior managers,” the office said. Second, data quality issues exist in the CFPB’s tracking spreadsheets for Equal Employment Opportunity complaints and negotiated grievances, the report said, and certain data related to performance management are not analyzed for trends that could indicate potential ...

FHA launched into the new year with a slight dip in forward mortgage loan originations in January from December with nonbanks leading the charge, according to Inside FHA Lending’s analysis of agency data. Lenders originated $11.8 billion in FHA-insured loans in January, a 0.7 percent decrease from December and down 3.5 percent from the prior year. FHA was charging a higher annual mortgage insurance premium of 1.35 percent for most of the month until a 50 basis point reduction, effective Jan. 26, lowered the MIP to 0.85 percent for a 30-year, fixed-rate mortgage with a five percent downpayment, and down to 0.80 percent for a similar FHA loan with more than five percent downpayment. The impact of the reduced MIP on February originations is still unclear, but most FHA lenders are expecting a boost in volume because many consumers ... [1 chart]

With the ink still wet on a $2.6 billion settlement agreement reached in principle with the Department of Justice late last month, Morgan Stanley is apparently in discussion with New York Attorney General Eric Schneiderman to avert another potential MBS lawsuit. In a recent regulatory filing, the investment bank disclosed that the New York AG Office, also a member of the presidential RMBS Working Group that brought the previous MBS lawsuit against the firm, indicated its intention to file a similar lawsuit. The lawsuit is related to approximately 30 subprime securitizations sponsored by Morgan, the AG wrote in a Jan. 13 notice to the bank. The suit would allege...