As most residential stakeholders know, nonbank risk is an issue that has caught the eye of the Federal Housing Finance Agency and the Department of Housing and Urban Development because nonbanks are major counterparties to Fannie Mae, Freddie Mac as well as Ginnie Mae.
Kristy Fercho of Flagstar said the bank is comfortable with the CFPB’s plans, noting the transition to a new measure for QM status should be “pretty easy to manage.”
Average credit scores, DTI ratios and LTV ratios haven’t loosened much in the past two years as expanded-credit MBS issuance soared. The investment-property share of MBS issuance is also on the rise. (Includes three data charts.)
Bank of America retained 94% of its mortgage originations in the fourth quarter of 2019, a much higher retention rate than other big banks. Officials at the bank said BofA’s loans offer better yields than MBS.
The CFPB is considering eliminating the DTI ratio metric when determining the QM status of a mortgage and instead basing the designation on the interest rate. The proposal was met with mixed reactions.