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Inside Mortgage Finance

July 17, 2014

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FHFA MI Proposal Could Give a Competitive Edge To ‘Newbies,’ Narrow Gap With FHA Pricing

Private mortgage insurers that survived the housing market collapse are quietly gnashing their teeth over new eligibility rules proposed by the Federal Housing Finance Agency, which likely will cause some to reengineer their corporate structures and/or raise additional capital. The good news for the legacy firms – Genworth, Mortgage Guaranty Insurance Corp., Radian and United Guaranty – is that they have the financial ability to meet the new capital standards. The bad news – for this group and MI newcomers – is that the FHFA’s proposals would narrow the competitive gap between the private MIs and the FHA. One trade group official, speaking under the condition his name not be used, noted... Read More

Mortgage Brokers Peeved as CFPB Targets Those Acting as Mini-Correspondents for More Scrutiny

The Consumer Financial Protection Bureau late last week said it will take a close look at mortgage brokers acting as mini-correspondents, particularly if they are just trying to get around disclosure requirements and limits on broker compensation. The CFPB is concerned that some mortgage brokers are claiming to be mini-correspondent lenders by establishing warehouse funding lines when they are still essentially just facilitating a transaction between a borrower and a lender. “While some brokers may be setting up such arrangements because they intend to grow into full correspondent lenders, the bureau is concerned... Read More

Most of the Megabanks Saw Mortgage Profits Increase Firmly in 2Q; A Barometer for the Rest of the Industry?

The nation’s megabanks reported fairly strong mortgage earnings during the second quarter thanks to a jump in new originations, robust servicing revenue and expense cuts. If the results reported by Wells Fargo, JPMorgan Chase, Bank of America and Citigroup are any indication, the industry may be rebounding from a rough stretch in late 2013 and early 2014. But the first quarter of this year was so bad – and originations so weak – that lenders had no place to go but up. Larry Charbonneau, a warehouse lending analyst, said... Read More

Industry Groups Across the Spectrum Generally Support Possible DTI ‘Right to Cure’ For QM

Representatives of the various segments of the mortgage banking world are mostly receptive to a hypothetical “right to cure” an otherwise qualified mortgage loan that inadvertently breeches the QM 43 percent debt-to-income threshold – despite the complexity associated with putting it into play. Most supporters of such a corrective mechanism agreed with the Consumer Financial Protection Bureau that utilizing it could be complicated. “We agree that creditors’ use of any DTI cure provision would be limited. Nevertheless, we do not believe the idea should be dismissed simply because it may be complicated,” the Consumer Mortgage Coalition said in its public comment letter to the agency. The Housing Policy Council of the Financial Services Roundtable also acknowledged... Read More

FHFA-OIG Report Cites Purchase Mortgage Risks To Fannie, Freddie From Nonbank, Smaller Lenders

The recent shift in direct mortgage sales by smaller and nonbank lenders has reduced Fannie Mae’s and Freddie Mac’s concentration risks, but the trend has led to an increase in counterparty credit risk, according to the Federal Housing Finance Agency’s official watchdog. The evaluation report issued this week by the FHFA’s Office of Inspector General said the regulator of the two government-sponsored enterprises needs to monitor Fannie’s and Freddie’s risk-management controls regarding smaller lenders and nonbanks. According to Inside Mortgage Trends, an affiliated newsletter, nonbank sellers accounted... Read More

House Democrats’ ‘Middle Ground’ Bill Lauded by Industry But Lawmakers Tired of Mortgage Reform

A new “middle ground” legislative proposal that would replace Fannie Mae and Freddie Mac with a beefed-up Ginnie Mae is getting high marks from industry observers, but lawmakers on both sides of Capitol Hill have no more appetite for housing finance reform this year. The Partnership to Strengthen Homeownership Act, H.R. 5055, sponsored by House Democrats John Delaney (MD), John Carney (DE) and Jim Himes (CT), would create a new Ginnie Mae mortgage-backed security for conventional mortgages. It would have the full faith and credit of the federal government while tapping private sector capital to absorb some of the risk. H.R. 5055 has... Read More

The Dodd-Frank Act at Four: Helping to Prevent Mortgage Problems and Decreasing the Pool of Potential Borrowers

Mortgage industry participants suggest that the Dodd-Frank Act has helped to ensure that problems seen in the mortgage market in 2005 and beyond are unlikely to occur again. However, lenders suggest that the DFA has also limited access to credit for potential borrowers. Four years after the DFA was signed into law, a number of think tanks convened panels this week to analyze its impact. Predictably, consumer advocates are largely happy with the DFA while lenders have more mixed feelings about the law, which created the Consumer Financial Protection Bureau and a landslide of new mortgage regulations. “The mortgage market is... Read More

Miami Loses Discrimination Fight with Banks, But Some States Find Ways to Force Banks to Pay Foreclosure Costs

While legal attempts by city governments to force large banks to pay for the high cost of foreclosure have failed, efforts to resolve the problem in state legislatures appear to be making headway. The City of Miami suffered consecutive defeats in three of the four lawsuits it filed against major banks after a federal district court judge dismissed all three because of the city’s lack of standing to bring suit under the federal Fair Housing Act. U.S. District Court Judge William Dimitrouleas dismissed... Read More

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