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Inside Mortgage Finance

May 30, 2013

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Purchase-Mortgage Market Off to Firm Start In Early 2013 Despite Seasonal Slowdown

The mortgage industry is banking heavily on a resurging purchase-mortgage market to help ease the pain of declining refinance volume in 2013 and beyond, and the slow start for the sector this year may be largely due to seasonal factors. Purchase-mortgage originations in the first three months of 2013 were down by 12.5 percent from the fourth quarter of 2012, according to a new Inside Mortgage Finance ranking and analysis. That was a considerably bigger decline than the 2.1 percent drop in refinance lending, which accounted for a hefty 76.2 percent of total mortgage originations in early 2013. But the estimated $119.0 billion in purchase-mortgage originations during the first quarter was...[Includes three data charts] Read More

CFPB Finalizes ATR Amendments for Small Creditors, Revises Loan Originator Compensation Calculation

The Consumer Financial Protection Bureau this week finalized amendments to its ability-to-repay rule to revise how loan origination compensation is calculated for certain purposes. The agency also provided exemptions and modifications for small creditors, community development lenders and housing stabilization programs. The Dodd-Frank Act generally provides that points and fees on a qualified mortgages may not exceed 3 percent of the loan balance, and that points and fees in excess of 5 percent will trigger the protections for high-cost mortgages under the Home Ownership and Equity Protection Act. Dodd-Frank also included a provision requiring that loan originator compensation be counted toward these thresholds, even if it is not paid upfront by the consumer directly to the loan originator. The revised rule excludes... Read More

Legislation Would Put Fannie, Freddie in Receivership Within 18 Months, Senators Drafting Bipartisan GSE Bill

Legislation introduced last week by a Senate Republican would revoke the charters of Fannie Mae and Freddie Mac and create a new Mortgage Finance Agency for the securitization of single-family and multifamily mortgages. Meanwhile, a separate bipartisan Senate bill still in the works would also dispense with the existing two government-sponsored enterprises while building a new one. Filed on May 23 by Sen. Johnny Isakson, the Mortgage Finance Act of 2013 is patterned on legislation the Georgia Republican proposed in 2011. It would put the GSEs into “irrevocable receivership,” with the Federal Housing Finance Agency tasked as their receiver no later than 18 months after enactment of the bill. “Immediately upon placement of the enterprises into receivership, the FHFA shall commence... Read More

Price of GSE Stock Keeps Rising, Consumer Advocate Nader Demands ‘Protection’ for Common Shareholders

Consumer advocate Ralph Nader doesn’t exactly have a seat at the mortgage reform table, but that isn’t stopping him from asking the Treasury Department to do something to protect what he calls “the already financially injured common shareholders” of Fannie Mae and Freddie Mac. In a recent letter to Treasury Secretary Jack Lew, Nader blames a host of senior government officials – including Federal Reserve Chairman Ben Bernanke – for misleading investors about the financial health of Fannie and Freddie just months before they were seized by the federal government in September 2008. Nader, a one-time shareholder in the government-sponsored enterprises, is pushing... Read More

Warehouse Sector Remained Strong in 1Q, But Concerns About Next Year Surfacing

Warehouse lenders that finance nonbank mortgage firms continue to report strong commitment volumes and usage rates, but there is an underlying fear that the good times won’t last forever. Nevertheless, that’s not stopping their telephones from ringing. “We’re seeing more requests for increases in lines than decreases,” said a senior manager who spoke under the condition his name not be used. “Most of our lines are holding steady.” Bob Garrett, executive vice president of mortgage warehouse lending at First Tennessee Bank, said...[Includes one data chart] Read More

Wells Fargo, HSBC and Others Step Up Auctions Of Nonperforming Mortgages, Prices on the Rise

The long-awaited boom in nonperforming loan sales may finally be here, as megabanks such as Wells Fargo, Citigroup and HSBC have begun testing investor appetites by offering large packages in the open market. According to investors and advisors who play in the space, Wells recently auctioned off an $800 million NPL package and HSBC sold a $750 million portfolio. Recently, Popular Bank said that it entered... Read More

Brokers Consider Ways to Bypass 3 Percent Points-and-Fees Cap, But Experts Warn Against Switching Hats Too Soon

Loan originators seeking to exclude their compensation from the 3 percent points-and-fees calculation under the Dodd-Frank Act could consider becoming a correspondent lender or a net branch operator to skirt the restriction. But industry experts caution that such a plan has its own pitfalls. The possibility of brokers switching hats surfaced as the mortgage broker industry, once again, struggles against what it deems unfair restrictions on broker compensation. The Consumer Financial Protection Bureau appears to have addressed some of these issues with changes to its ability-to-repay rule designed to eliminate double counting in the calculation of loan originator compensation. [See the story on page 5.] The inclusion of loan originator (LO) compensation in the calculation of points and fees under the CFPB rule raises... Read More

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