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Inside Mortgage Finance

June 29, 2017

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Servicing Group Focuses on Issues with Government-Insured Mortgages; Also Looking for Ways to Simplify Servicing

A group of servicers and other industry participants is focusing on issues with government-insured mortgages and has plans to simplify servicing practices. The Mortgage Servicing Collaborative was organized by the Urban Institute’s Housing Finance Policy Center. It includes representatives from a number of major servicers along with some officials from trade groups, consumer groups, investors, mortgage insurers, vendors and academics. The goal is... Read More

Little Change in Demographics of Mortgage Production in Early 2017 Despite Product Tilt

Nearly every cross-section of the mortgage production business saw sharp declines in lending volume during the first three months of 2017, leaving the distribution of new originations virtually the same as last year. Banks, thrifts and credit unions accounted for 50.5 percent of first-lien mortgage production by the top 100 lenders in the first quarter. Their combined volume was down 32.2 percent from the fourth quarter, while the 54 nonbanks in the top 100 had an aggregate decline of 32.6 percent. There was...[Includes two data tables] Read More

Will the FHLBanks Get Caught Up in Housing-Finance Reform? Rumors Swirl About Further Consolidation

To date, the focus of housing-finance reform has been on Fannie Mae and Freddie Mac, but they aren’t the only government-sponsored enterprises in the current system. The Federal Home Loan Banks wobbled through the crisis without needing a bailout and have been profitable ever since. There’s increasing chatter in Washington circles that the FHLBanks should be addressed in reform too. One key question is the matter of consolidation. There are 11 FHLBanks, each operating with its own management team, highly paid directors and staffs that could be combined. According to former Chicago FHLBank President Alex Pollock, “Discussions of merging the FHLBs are... Read More

Beware of Promises Made by Mortgage Disruptors? Or Is Failing Just Part of the Innovation Process?

Sindeo, a mortgage technology-centric company billed as a “disruptor” in some quarters of the industry, closed its doors earlier this month, spurring new talk that making headway via innovative software isn’t so easy – especially in a challenging origination market. As one veteran mortgage consultant put it: “There are no Amazons in this industry,” a reference to the online giant that has profited by causing a wave of destruction in the traditional retail space, including clothing stores and book outlets. Regarding Sindeo’s collapse, Jordan Brown, CEO of MarketWise Advisors, added... Read More

State Regulators Say CFPB Mortgage Rules Impede Community Banks’ Mortgage Lending, Relief Needed

The Conference of State Bank Supervisors has called for granting community banks relief from the Consumer Financial Protection Bureau’s ability-to-repay rule as well as the reporting requirements under the Home Mortgage Disclosure Act. Testifying before the Senate Banking, Housing and Urban Affairs Committee last week, Charles Cooper, commissioner of the Texas Banking Department and immediate past chairman of CSBS, said the rules limit the ability of smaller financial institutions to engage in residential lending. “Smaller and less complex institutions have reported... Read More

MBA Argues for Class-Action Waivers and Arbitration Clauses in Employment Agreements

The Mortgage Bankers Association recently submitted a brief to the Supreme Court of the United States in a pending case regarding class-action waivers and arbitration clauses in employment agreements. The MBA and eight state-affiliated MBAs argued that class action waivers are critical for smaller employers such as independent mortgage companies. The Supreme Court has agreed to hear Epic Systems Corp. v. Lewis as part of its term that begins in October. Epic Systems, a health care software company, required certain groups of employees to agree to bring any wage-and-hour claims against the company only through individual arbitration. Circuit courts have issued... Read More

House Panel May Take Up Housing-Finance Reform This Fall, But Challenges Are Plentiful

The House Financial Services Committee may take up housing-finance reform after Congress returns from its August recess, according to a key GOP member of the panel. But Rep. Blaine Luetkemeyer, R-MO, who chairs the subcommittee on financial services and consumer credit, told a recent meeting of the Financial Services Roundtable that he doesn’t expect any real movement on housing reform this year. “I wouldn’t expect... Read More

Flood Insurance Bills Advance in House, Other Mortgage Reforms Introduced

The U.S. House of Representatives was a relatively busy place last week, with a handful of measures related to flood insurance passing the House Financial Services Committee, and a few other, small-scale, individual mortgage reforms being introduced. Among the bills passed by the committee was H.R. 2875, the “National Flood Insurance Program Administrative Reform Act of 2017,” introduced by Rep. Nydia Velazquez, D-NY. It would make certain administrative reforms to the NFIP to increase fairness and accuracy and to protect the taxpayer from program fraud and abuse. The legislation passed on a 58-0 vote. Also favorably voted on was... Read More

Compliance Experts Warn of FCA Pitfalls for Servicers as DOJ Expands Statute’s Applicability

As much as the False Claims Act has been a formidable government enforcement tool against FHA loan originators, the statute is also being used increasingly against mortgage servicers, according to compliance experts. Within the last 18 months, the DOJ has expanded FCA use to reverse mortgages and loan servicing, according to Phil Schulman and Krista Cooley, both partners in Mayer Brown’s Washington office and members of the firm’s Consumer Financial Services group, during a recent podcast. While the Department of Justice has consistently used the FCA and its treble-damage provision to enforce FHA loan origination rules, the economic downturn and foreclosure crisis has put... Read More

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