The CFPB should allow compensating factors to be considered in lieu of a strict 43% DTI ratio limit for determining QM status, according to two separate proposals.
Issuance of expanded-credit MBS is set for a strong start in the third quarter. Presale reports for eight deals were published in the past two weeks, including the second-largest post-crisis issuance.
Average credit scores, DTI ratios and LTV ratios are staying relatively steady as expanded-credit MBS issuance booms. Lenders are putting more emphasis on underwriting based on alternative documentation.
The Alternative Reference Rate Committee detailed how a modified SOFR could be used in place of LIBOR for new ARM originations. It also proposed fallback language to move new ARMs away from LIBOR.
Mike Fontaine, CFO of Plaza Home Mortgage, said servicers can recognize significant benefits from advance financing. “When you have a Ginnie portfolio, servicing advances can be a rather large cash drain,” he said. “If you have the ability to finance that piece of it, it will provide more liquidity.”
The Mortgage Bankers Association is making headway on getting the CFPB to change its loan originator compensation rules. But how far will the bureau go?
Chris George, CEO of CMG Financial and the current chairman of the MBA, provided an update on the effort this week at the California Mortgage Bankers Association’s western secondary market conference in San Francisco.