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Inside Mortgage Finance

June 7, 2012

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HARP Plays Growing Role in GSE Business, But Most Refinance Loans Still Done Through Normal Channels

Despite the sharp increase in production under the Home Affordable Refinance Program, the overwhelming majority of refinance mortgages financed by Fannie Mae and Freddie Mac are well below current property values with substantial borrower equity. According to official data released late last week by the Federal Housing Finance Agency, HARP production jumped a whopping 93.4 percent in the first quarter of 2012, hitting a record 180,185 loans. HARP volume at Freddie was up more than double from the fourth quarter, while Fannie production jumped 79.8 percent. The first...(Includes three data charts) Read More

CFPB Reopens Comment Period on Qualified Mortgage Rule, in a ‘Sign That They’re Trying to Get it Right’

The rule from Dodd-Frank with the largest ramifications for mortgage banking was reopened for comment late last week, and industry players are pleased that the Consumer Financial Protection Bureau is trying to get the definition of “qualified mortgage” right. “The reason things have slowed down is that the bureau learned more and realized what the impact of this rule is,” said Bob Davis, executive vice president at the American Bankers Association. “They have responded prudently and wisely by reopening the comments.” The qualified mortgage definition will outline a set of standards for what will become the new... Read More

Fannie Names New Chief Executive, Senators Object to GSE CEO Salaries $100K Above FHFA’s ‘Compensation Target’

Fannie Mae this week tapped its chief administrative officer and general counsel to replace the company’s outgoing chief executive even as a bipartisan group of senators say they “remain deeply concerned” about “excessive” executive compensation at both government-sponsored enterprises. Fannie’s board of directors announced, with the Federal Housing Finance Agency’s consent, the appointment of Timothy Mayopoulos as president and CEO and elected him a member of the board. Mayopoulos, 53, currently holds the title of executive vice president but has managed several critical functions since he joined Fannie... Read More

OIG: FHFA Must Strengthen Oversight Of FHLBank Risk Management Practices

Although it has taken steps to mitigate risk related to advances and collateral at the 12 Federal Home Loan Banks, the Federal Housing Finance Agency needs to do more to strengthen its supervisory framework for the FHLBanks' risk management practices, according to a new report by the FHFA’s official watchdog. The FHFA Office of Inspector General found in an audit released late last week that the agency has not implemented a majority of its own examiners’ recommendations to effectively manage advances and collateral risks within the FHLBank system. “Although preliminary evidence suggests... Read More

QRM Not Likely Until QM Is Done; CFPB Reaches Deal on Coordinating Supervision

Banking regulators confirmed this week that the controversial risk-retention rule for mortgage securitization won’t be finalized until after an equally controversial rule on qualified mortgages is completed by the Consumer Financial Protection Bureau. CFPB Director Richard Cordray said during a hearing before the Senate Banking, Housing and Urban Affairs Committee that his agency still intends to make the Jan. 13, 2013, deadline set by Congress for issuing a final “ability-to-repay” rule required by the Dodd-Frank Act. Cordray said that the bureau would not submit the ability-to-repay rule to... Read More

SunTrust Pays $21 Million to Settle Biased Pricing Allegations, Compliance Expert Predicts Rise in Loan Denial Complaints

SunTrust Mortgage has agreed to pay $21 million to the federal government to resolve a lawsuit alleging pricing discrimination against minority borrowers over a period of four years. The Department of Justice, which brought the pricing lawsuit, said the settlement also requires that SunTrust continue the anti-discrimination policies and practices it had adopted prior to the settlement. The mortgage lender agreed to the settlement voluntarily without admitting to any wrongdoing and without any factual findings, adjudications or litigation. Filed in U.S. District Court in Richmond, VA, the... Read More

NY Chinatown Bank, Employees Charged in Alleged Fraudulent Mortgage Scheme Against Fannie Mae

Abacus Federal Savings Bank, a small bank that provides loans and other banking services in New York City’s Chinatown, was indicted along with 11 of its former employees for allegedly originating and selling fraudulent mortgage loans to Fannie Mae over a five-year period. An additional eight ex-employees agreed to waive indictment and admitted their guilt in connection with the alleged conspiracy, according to Manhattan District Attorney Cyrus Vance, who brought the 184 indictment charges last week. The indictment came after a two-year investigation of Abacus, its employees and managers, who allegedly... Read More

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