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Inside Mortgage Finance

October 17, 2013

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CFPB Responds to Continued Industry Inquiries, Issues Guidance on Mortgage Servicing Rules

The Consumer Financial Protection Bureau this week updated certain provisions in its complex new mortgage servicing rules, most notably the interplay between the servicing rules and the U.S. bankruptcy code, and the Fair Debt Collection Practices Act. “As servicing implementation enters its final phases, we heard from many sources that it was important to address these remaining issues to ensure a smooth transition and provide certainty to the market,” said CFPB Director Richard Cordray. “When mortgage servicers better understand the rules they have to follow, that is better for consumers.” One of the latest hot buttons to emerge regarding the servicing rules has been... Read More

GSE Market Continued Tilting Toward Purchase Mortgages in 2013, Signs of Expanding Credit Box

Purchase-mortgage lending has become increasingly critical to maintaining production volume throughout the year, and there are some indicators that lenders may be starting to stretch a little more to bring in new business, according to a new Inside Mortgage Finance analysis of Fannie Mae and Freddie Mac loan-level data. During September, purchase mortgages accounted for 42.4 percent of new business at the government-sponsored enterprises and may well surpass refinance volume by the end of the year. As recently as March 2013, purchase mortgages represented just 16.3 percent of single-family loans securitized by the two GSEs. After monthly activity peaked at $36.9 billion in August, the actual volume of purchase mortgages delivered to the GSEs did sputter...[Includes two data charts] Read More

3Q13 Mortgage Massacre: Slowing Production, Reduced Profits and Higher MSR Values

For the nation’s three largest originators of home mortgages – Wells Fargo, JPMorgan Chase and Bank of America – the third quarter of 2013 turned out the way most observers expected, with slumping production, less revenue and tighter profit margins. The three major lenders, which accounted for almost 30 percent of loan originations in the first half of the year, saw big drops in refinance volume. Although they all unveiled plans to cut thousands of mortgage jobs, efforts to trim expenses did not come fast enough. Wells Fargo said... Read More

Freddie Sees 71 Percent Plunge in Business From Wells; Evidence Points to Better Execution on Fannie MBS

In the third quarter of 2013, Wells Fargo sold a mere $8.4 billion in residential mortgages to Freddie Mac, a 71.3 percent plunge in volume from the second quarter, and a figure that represents just 17 percent of what the nation’s largest lender sold to Fannie Mae. Analysts that closely follow Wells Fargo believe that the megabank’s switch in secondary market strategy was simply a matter of money, as securitizing through Fannie was more profitable than sending most of its business to Freddie, as it traditionally has. Moshe Orenbuch, an analyst and managing director at Credit Suisse, noted... Read More

Uncertainty Regarding CFPB’s QM Rule Shifts from What’s Included to How Courts Will Interpret It

After years of claiming that regulatory uncertainty was holding back mortgage originations, lenders appeared to be on their way toward certainty as the Consumer Financial Protection Bureau established a definition for qualified mortgages at the beginning of this year. However, industry participants suggest that few originations of non-QMs are likely in the next few years due to uncertainty regarding litigation. “We don’t know how the courts are going to interpret the rule,” Jon Wishnia, a partner at the law firm of Lowenstein Sandler, said last week at the ABS East conference sponsored by Information Management Network in Miami. “That will really drive where the market goes.” CFPB officials have said... Read More

‘QM Plus’ Threatens Access to Credit, Fair Lending, Return of Private Capital to the Mortgage Market

The so-called QM Plus alternative for defining qualified residential mortgages under the emerging risk-retention rule for asset securitizations threatens the intent of the Dodd-Frank Act to balance consumer protection and fair access to credit, a top industry official said last week. “We really think that the QM Plus provision goes way too far in tipping the balance” between consumer protection and access to credit, David Stevens, president and CEO of the Mortgage Bankers Association, said during a webinar last week sponsored by Inside Mortgage Finance. The revised risk-retention/QRM rule jointly released by a handful of federal agencies in August would align... Read More

Agencies Propose Acceptance of Private Flood Insurance To Meet Mandatory Purchase Requirements, Set Escrows

Five federal regulatory agencies have issued a joint proposed rule to implement certain provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 regarding private flood insurance, escrow of flood insurance payments and forced-placement of flood insurance. The proposal would affect loans secured by property in a special flood hazard area (SFHA), which is defined as an area within a floodplain having a one percent or greater chance of flooding in any given year. The rash of catastrophic flooding seen in recent years across the country has underscored the need for stronger flood insurance regulations. The Office of the Comptroller of the Currency, Federal Reserve Board, Federal Deposit Insurance Corp., Farm Credit Administration and the National Credit Union Administration are revising... Read More

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