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Inside Nonconforming Markets

April 16, 2001

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Lenders Take Aim at Abuse with Best Practices Standards

Best practices can help subprime lenders navigate through the stormy waters of the predatory lending debate, officials at some top companies said last week. "You’ve got to have a policy on predatory lending in this environment," said Denis O’Toole, vice president for government relations at Household International, during last week’s Mortgage Bankers Association of America subprime lending conference in Washington, DC. Read More

B&C News Briefs

The Department of Justice is one of several Federal agencies that have investigated the business practices of subprime lenders recently. Last year, the DOJ was part of a landmark fair lending settlement with Delta Funding. At the recent MBA subprime conference, Alexander "Sandy" Ross, special litigation council in the DOJ’s Civil Rights unit, reminded lenders of the importance of self-policing. In particular, he suggested that subprime lenders carefully train and monitor their middle management. Read More

Fairbanks Climbs Servicing Rankings with IMC Purchase

The game of musical chairs that has characterized the subprime industry in recent months continued last week, as CitiFinance reached a deal to sell off part of its extensive portfolio. At a gathering in Washington, DC, last week, Richard Lee, executive vice president for business development at Fairbanks Capital Corporation, revealed that the company had purchased the servicing platform of bankrupt IMC Mortgage, which Citi added to its stable last year. Read More

Broader HOEPA Reg Under Discussion at Federal Reserve

Industry complaints have apparently led some staff members at the Federal Reserve Board to take a second look at a proposal that would lower high-cost triggers. But mortgage lenders may be getting more than they bargained for: a decision to keep triggers where they are – in favor of a broader approach- would likely mean more sweeping policy changes that would impact even those lenders who opt not to play in the high-cost arena. Read More

Fitch Updates NIM Rating Criteria, Focuses on Losses

Skillful servicing and innovations such as mortgage insurance have helped reduce the risks associated with net interest margin securitizations, experts say. But the transactions – backed by residual cash flows – remain complex to rate. Prompted by its merger with Duff & Phelps, rating agency Fitch IBCA has released new criteria for evaluating net interest margin transactions. In general, the Fitch guidelines highlight the growing importance of prepayment penalties and loan servicing in the subprime Read More

RFC Paces an Active Subprime Securitization Market in 2001

The subprime securitization market appears headed for a banner year. In fact, a strong first quarter has put the sector on pace to register what could be its best performance in three years. According to a new Inside B&C Lending ranking of the top issuers and underwriters, a hefty $15.84 billion in securities backed by subprime mortgages came to market during the first three months of this year. That’s the busiest the sector has been Read More

Most State Measures Set to Die, Come Back Next Year

Subprime lenders may be able to breathe again – at least for a while – as the vast majority of state and local initiatives aimed at predatory lending appear unlikely to become law this year. But, as failed industry attempts to kill an ordinance in Philadelphia demonstrate, 2001 could still prove a year of living dangerously for the industry. Read More

Trade Groups Ask Regulators to Kill Subprime Guidance

Balking at a definition that could make it riskier – and costlier – to originate subprime mortgages, four industry trade groups have urged regulators to kill controversial guidance to examiners. "We believe that the expanded interagency guidance on supervision of subprime lending will have the significant, unintended impact of reducing available mortgage credit for all of our customers and we ask that it be withdrawn," said America’s Community Bankers in a letter to bank regulators. Read More

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