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Inside Mortgage Finance

November 7, 2013

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Senators Push Lender Groups for Unified Plan for Ensuring Small-Lender Access to Secondary Market

Figuring out the details on how to structure, capitalize and operate new secondary-market facilities for small lenders are key challenges for the Senate Banking, Housing and Urban Affairs Committee as it pushes to mark up mortgage reform legislation by the end of this year. This week, lawmakers pushed lender trade groups to come together and find answers. The bipartisan Senate blueprint for secondary mortgage market reform includes several key provisions designed to facilitate small-lender access when Fannie Mae and Freddie Mac are no longer around, including creation of a new mutual or cooperatively-owned institution through which lenders could issue conventional mortgage-backed securities guaranteed by the government. If a new MBS mutual for small lenders is going to be competitive, it will have to be capitalized...[Includes one data chart] Read More

Fannie and Freddie Officials Stress Quality Control As Best Strategy to Curb Repurchase Demands

Despite this year’s implementation of a new Fannie Mae/Freddie Mac representations and warranties framework that offers some repurchase relief three years after a loan is sold, officials from the two government-sponsored enterprises agree that the best way to beat a buyback request is to focus on quality control. Participants during an Inside Mortgage Finance webinar this week said the new reps and warranties policy has brought greatly increased scrutiny of new mortgages guaranteed by Fannie and Freddie. “Quality in the loan-manufacturing process is... Read More

SunTrust Exits Wholesale, Others Contemplating The Same. But Some Believe It’s Time to Get In

SunTrust Mortgage – like many large banks before it – is pulling the ripcord on the wholesale-broker channel, though it will remain as a correspondent buyer of closed mortgages. The company ranked 12th in wholesale-broker lending during the first half of 2013, according to Inside Mortgage Finance. A company spokesman confirmed the bank’s exit from the sector, but declined to provide any explanation. “Clients with applications currently pending in this channel are not affected by this announcement,” he said. “We will continue to work to close their loans.” Brokers were... Read More

With Mt. Holly Settlement, Disparate-Impact Debate Shifts To Pending Insurer Lawsuit Making Similar Claims v. HUD

A little-known case about disparate impact in housing and lending discrimination now before the U.S. District Court for the District of Columbia will likely be the stage for the next legal debate on the question whether disparate-impact claims are permissible under the Fair Housing Act. It could also decide whether the Consumer Financial Protection Bureau can apply disparate impact in its examinations and investigations. With the Mount Holly, NJ, town council reportedly poised to vote on a proposed settlement, the U.S. Supreme Court, for the second time in two years, would be deprived of the opportunity to decide the fate of disparate impact. Reports indicate the town council may have a decision by Nov. 7 and a settlement could end the case, Mount Holly v. Mount Holly Garden Citizens in Action, Inc., before scheduled oral arguments on Dec. 4. The Supreme Court was poised... Read More

Rep. Watt’s FHFA Nomination Falls Short in Senate Vote, Dems Vow Another Try, Industry Observers Doubtful

Expect Senate Democrats and the White House to continue their push to see Rep. Mel Watt, D-NC, confirmed as the new director of the Federal Housing Finance Agency despite falling four votes short in a key procedural vote in the Senate last week. On Oct. 31, Senators voted 56 to 42 to limit floor debate on Watt’s nomination, well below the 60-member supermajority required to invoke cloture and shutter any potential filibuster under current Senate rules. Had Democrats been able to clear the 60-vote threshold and invoke cloture, it’s all but certain that Watt would have become the new FHFA director: the final vote on his nomination would then need only a simple majority of 51 votes. Senate Majority Leader Harry Reid, D-NV, has expressed... Read More

Servicing Prices Become a Little Less Frothy, Some MSR Bids Will Get Pushed Into 2014

A few weeks back, many servicing brokers were predicting a land rush to close deals by year-end, but there’s a new school of thought that predicts sellers might wait until early 2014 to unload some of their deals. “While we don’t expect the [mortgage servicing rights] deal flow to turn off completely for 2013 just yet, we have noticed quite a slowdown in the marketplace as compared to the summer and early fall,” said George Christo, executive vice president of The Prestwick Group. “Many of our conversations with buyers and sellers have pivoted to setting the table for the first quarter of 2014 settlements.” Moreover, the frothy prices being offered for MSRs are... Read More

Non-Banks Build Share in Mortgage Servicing Market, But Big Operations Still Dominate

Nationstar and PennyMac led the ongoing charge of non-banks into the mortgage servicing business during the third quarter of 2013, according to a new Inside Mortgage Finance ranking. The two companies reported increases in their servicing portfolios of 17.9 percent and 19.1 percent, respectively, from the end of the second quarter. The other stand-out big gain was a 14.2 percent increase in servicing reported by EverBank. Non-bank servicers accounted...[Includes one data chart] Read More

Groups Urge HUD to Remove Distinction Between Safe Harbor, Rebuttable Presumption in Proposed QM Rule

While the Department of Housing and Urban Development’s proposed definition of a “qualified mortgage” is superior to the treatment FHA-insured mortgage loans would receive under the Consumer Financial Protection Bureau’s QM rule, it would add significant regulatory burden and costs and increase litigation risks, warned mortgage lenders. HUD’s proposed distinction between safe harbor and rebuttable presumption loans is unnecessary for FHA loans because they already meet QM requirements, according to industry trade groups. Rebuttable presumption would only impose more costs and reduce credit availability for borrowers who need FHA credit the most and likely create more confusion, lenders said. The inclusion of the FHA annual mortgage insurance premium (MIP) in the annual percentage calculation under the CFPB rule would cause... Read More

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