Federal Agencies

Browse articles from all of our Newsletters related to Federal Agencies.

July 21, 2017 - Inside Nonconforming Markets

Non-Agency Participants Call for More TRID Fixes

The Consumer Financial Protection Bureau needs to do more to address problems with the TILA-RESPA Integrated Disclosure rule, according to participants in the non-agency market. The final rule issued this month by the CFPB was seen as helpful but insufficient. The final rule from the CFPB clarified some issues and formalized some guidance. The Structured Finance Industry Group said uncertainty regarding TRID violations persists. “SFIG applauds the efforts of the CFPB to ...


July 21, 2017 - Inside MBS & ABS

CFPB Arbitration Rule Could Fuel Litigation, Impair Securitization Market Liquidity

Last week, the Consumer Financial Protection Bureau issued its long-awaited rule banning mandatory arbitration in consumer financial contracts. The industry concern is that, if left intact, the rule could lead to a rash of litigation impairing liquidity in the secondary markets and limiting consumer access to credit as companies seek to pull back on their risk exposure. The final rule prohibits “covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service.” It further requires...


July 21, 2017 - Inside MBS & ABS

PIMCO Says Tackle Changes to Non-Agency Market, Then Do GSE Reform; Firm Critical of Plans Thus Far

Pacific Investment Management Company published an opinion piece this week calling for changes in the non-agency market before policymakers enact reforms that affect the government-sponsored enterprises. PIMCO was also critical of other GSE reform proposals. “Without a functioning private mortgage market, it will be nearly impossible for the GSEs to shrink their footprint without significant disruption to the housing market and to the underlying homeownership rate,” PIMCO said. PIMCO was...


July 20, 2017 - Inside Mortgage Finance

As New HMDA Regime Approaches, CFPB Cuts Some Limited Slack, While Calls Continue for Delay

With the new data collection and reporting requirements under the Home Mortgage Disclosure Act now less than six months away, anxious industry calls for regulatory relief met with some limited success recently, while others continue to urge a broader extension of the implementation period. Late last week, the Consumer Financial Protection Bureau relented somewhat, proposing to temporarily ease HMDA reporting requirements for lenders that make a small number of home equity lines of credit. The agency proposed raising the threshold for HELOC reporting from 100 loans to 500 loans, starting in January 2018. Officials acknowledged they may have...


July 20, 2017 - Inside Mortgage Finance

CFPB Suffers Another RESPA Blow as Law Firm’s Affiliated Business Arrangement Validated by Court

Affiliated business arrangements may not be dead after all. Late last week, the U.S. District Court for the Western District of Kentucky ruled that such a network at the heart of a lawsuit brought by the Consumer Financial Protection Bureau was in fact legitimate as constituted under the Real Estate Settlement Procedures Act. In this case, which the bureau brought four years ago, the agency accused the Borders & Borders law firm of Louisville, KY, and its principals, Harry Borders, John Borders Jr. and J. David Borders, of illegally paying kickbacks for real estate settlement referrals through a network of shell companies. According to the CFPB’s complaint, the law firm operated...


July 17, 2017 - Inside the CFPB

Extend HMDA Implementation Period, Industry Urges CFPB

The American Bankers Association and banking associations from each of the 50 states and Puerto Rico last week called upon the CFPB to delay the new Home Mortgage Disclosure Act data collection and reporting requirements, which are scheduled to kick in Jan. 1, 2018. “We appreciate the bureau’s efforts to help lenders comply with the new reporting requirements,” the trade groups began. “Nonetheless, banks of all sizes are gravely concerned that they will not be able to assure proper compliance by the January timeframe.” For one thing, the new HMDA rules are inherently complex and very expensive to implement, according to the ABA and its affiliates. Also, they are incomplete. “Recently proposed adjustments to the rule are complicating compliance efforts...


July 17, 2017 - Inside the CFPB

Most Mortgage Complaints Plunge, But Gripes About Servicing Jump

Based on plunging consumer gripes sent to the CFPB, the mortgage market looks like it’s in great shape – with one glaring exception: mortgage servicing. According to a new analysis by Inside the CFPB of second quarter data from the bureau’s consumer complaint database, mortgage servicing saw a 17.5 percent jump in borrower grousing during the second quarter, but a milder 1.4 percent uptick from the first half of 2016. That latter level would be barely perceptible were it not in such stark contrast to the double-digit drop-offs seen in all other mortgage-related areas tracked by this publication. For instance, kvetching about loan modifications plummeted 81.5 percent from the first quarter of this year to the second, and [With exclusive data charts]...


July 17, 2017 - Inside the CFPB

Arbitration Rule a Risk to Banks’ Safety and Soundness, OCC Says

It’s one thing for a regulatory agency to promulgate a rule and catch a lot of slack from the affected industry. It’s quite another when another regulatory agency takes issue with a rule. The CFPB got a bit of a surprise in this regard when it issued its arbitration final rule last week: the Office of the Comptroller of the Currency expressed concerns about the potential risk the rule could pose to the safety and soundness of the U.S. banking system. In a letter to CFPB Director Richard Cordray, OCC Acting Comptroller of the Currency Keith Noreika, a recent appointee of President Trump, said, “The OCC has a mandate to ensure the safety and soundness of the federal banking system...


July 17, 2017 - Inside the CFPB

Bureau Issues Final Rule to Ban Mandatory Arbitration Clauses

The CFPB has finally issued its long-awaited final rule banning mandatory arbitration in consumer financial contracts. For starters, the final rule prohibits “covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action concerning the covered consumer financial product or service.” Further, the final rule requires “covered providers that are involved in an arbitration [proceeding] pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the bureau and also to submit specified court records.” The new rule applies to the major markets for consumer financial products and services overseen by...


July 17, 2017 - Inside the CFPB

CFPB Cuts Small-Volume HELOC Lenders Some HMDA Slack

Last week, the CFPB issued a proposal to temporarily ease reporting requirements under the Home Mortgage Disclosure Act for small banks and credit unions that issue home-equity lines of credit – but based on the number of such loans, not asset size of the institution. Under the CFPB’s HMDA rules scheduled to take effect in January 2018, financial institutions are generally required to report HELOCs if they made 100 such loans in each of the past two years. Under the proposal released last week, the bureau would increase that threshold to 500 loans through calendar years 2018 and 2019 in order to give the consumer regulator the time to consider whether to make a permanent adjustment. “Home-equity lines of credit worsened ...


July 17, 2017 - Inside the CFPB

JPMorgan Details Reforms Needed to Mortgage Servicing Regulation

JPMorgan Chase told the CFPB it supports the bureau’s mission of protecting consumers and recognizes that regulatory guardrails are necessary to make sure mortgage servicers adequately address consumers’ needs. “However, certain provisions of Regulation X [which implements the Real Estate Settlement Procedures Act] impose burdens on servicers that increase servicing costs and impact access to consumer credit without providing proportional benefits to consumers,” the servicer said. JPMorgan was one of the industry participants commenting on the CFPB’s proposal to start assessing the effectiveness of its mortgage servicing rules under RESPA. The financial institution went on to some of the problem areas in Reg X that still need to be addressed, one of which has to do with rules for loss...


July 17, 2017 - Inside the CFPB

Industry Suggests Improvements to Servicing Rule Assessment

Trade organizations representing the mortgage banking industry provided a number of important suggestions for the CFPB as it proceeds with a Dodd-Frank Act requirement to assess its mortgage servicing rules at the five-year mark. The first issue the American Bankers Association raised in this regard in its comment letter to the bureau was the scope of the assessment. “The CFPB should incorporate all of the servicing rules into its review, including the rules that implement the Truth and Lending Act and the amendments that the CFPB adopted to the servicing rules in 2016,” the ABA said – not just the rules promulgated under the Real Estate Settlement Procedures Act. The bureau also should take into account the rules’ effects upon consumers...


July 17, 2017 - Inside the CFPB

Bureau Issues Proposed Rule to Address TRID’s ‘Black Hole’

In addition to the so-called TRID 2.0 final rule, the CFPB recently issued a notice of proposed rulemaking related to what’s known in the mortgage industry as TRID’s “black hole,” which refers to situations in which a lender is not permitted to use a closing disclosure to reset fee tolerances. More specifically, the proposal addresses when a creditor may use a Closing Disclosure (CD), instead of a Loan Estimate (LE), to determine if an estimated closing cost was disclosed in good faith and within tolerance. Currently, lenders are permitted, under certain limited circumstances, to use revised estimates, instead of the estimate originally disclosed to the borrower, to compare to the charges actually paid by or imposed on the borrower in...


July 17, 2017 - Inside the CFPB

CFPB Codifies Final Changes to TRID, Permits Sharing of the CD

The CFPB recently published long-awaited updates to its “Know Before You Owe” integrated disclosure mortgage rule, finalizing, among other things, amendments on finance charge disclosures, disclosures tied to housing assistance that a borrower receives, and when information can be shared with third parties, including real estate agents. The KBYO rule took effect in early October 2015 as part of an effort to simplify disclosures under two laws: the Truth in Lending Act and the Real Estate Settlement Procedures Act. The lending industry commonly refers to the combined disclosures as TRID, short for TILA/RESPA Integrated Disclosure rule. In a statement on the amendments, the CFPB noted that TRID “changed the total of payments calculation so that it did not make specific...


July 14, 2017 - Inside MBS & ABS

ABS Investors May Turn to ‘Moneyball’ Tactics With the Fed Expected to Increase Interest Rates

ABS investors could see strong returns by employing the “Moneyball” strategy pioneered in Major League Baseball by the Oakland Athletics, according to analysts at Wells Fargo Securities. The strategy, detailed in a book and movie, focuses on certain statistics that managers of the Athletics thought were undervalued by other teams. Wells said the theory can be adapted to the ABS market, with an emphasis on deals that can reliably hit “singles” instead of potentially risky investments that aim for home runs. “With interest rates low and ABS spreads reasonably tight, many market participants are...


July 14, 2017 - Inside MBS & ABS

MBS Trading Volume Increased in June, But Concerns Remain About Supply and What the Fed Might Do

The average daily trading volume of agency MBS reached $209.9 billion in June, the second highest reading of the year and a sign that liquidity is picking up, according to figures compiled by the Securities Industry and Financial Markets Association. The increase in trading comes despite the fact that Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $317.7 billion of new MBS in the second quarter, a 6.1 percent decline from the first quarter. For the six-month period, 2017 holds the edge with volume up 3.5 percent. But it hasn’t been...


July 14, 2017 - Inside MBS & ABS

Yellen Affirms Fed Balance Sheet Reduction to Start This Year, Analysts Try to Anticipate Market Impact

The Federal Reserve’s Open Market Committee is moving closer to beginning what is likely to be a long and drawn-out process to gradually and predictably unwind the U.S. central bank’s huge portfolio of agency MBS and debt – the sooner, the better, according to Fed chief Janet Yellen. “The FOMC intends to gradually reduce the Federal Reserve’s securities holdings by decreasing its reinvestment of the principal payments it receives from the securities held in the System Open Market Account,” she said this week in her semi-annual Humphrey-Hawkins testimony on monetary policy to members of Congress. “Specifically, such payments will be reinvested...


July 13, 2017 - Inside Mortgage Finance

CFPB Warns of Schemes to Steal Closing Funds from Homebuyers

Scams aimed at stealing homebuyers’ closing funds persist, according to a warning last week from the Consumer Financial Protection Bureau. The warning follows similar notices in recent years from the Federal Trade Commission. “The scammers attempt to steal the homebuyer’s closing funds – for example, their downpayment and closing costs – by sending the homebuyer an email posing as the homebuyer’s real estate agent or settlement agent (title company, escrow officer or attorney),” according to Davida Farrar, counsel in the CFPB’s consumer education and engagement division. In a post on the CFPB’s website, Farrar said...


July 13, 2017 - Inside Mortgage Finance

CFPB Finally Issues TRID 2.0 Clarifying Final Rule, Decides to Handle the ‘Black Hole’ Separately

After a few months of delay, the Consumer Financial Protection Bureau last week issued its long-awaited final rule clarifying a number of aspects of its integrated disclosure rulemaking under the Truth in Lending Act and the Real Estate Settlement Procedures Act, otherwise known as TRID 2.0. The most noteworthy revisions relate to good faith and revised disclosures, calculating cash to close, construction-to-permanent loans, and the sharing of disclosures during the origination process. In terms of good faith and revised disclosures, the 2017 TRID rule provides...


July 13, 2017 - Inside Mortgage Finance

CFPB Mortgage Servicing Rules Stabilized Market But Also Introduced Many Unintended Consequences

The mortgage servicing rules the Consumer Financial Protection Bureau promulgated in the wake of the mortgage market’s collapse brought much-needed stability to the loan servicing arena. But they also have had a host of unplanned side effects that continue to haunt the market to this day. That’s one of the prime takeaways from comments provided by some top lender/servicers and industry trade groups, in response to the CFPB’s announcement that it would begin its five-year assessment of its servicing rules as per the requirements of the Dodd-Frank Act. Wells Fargo said...


July 7, 2017 - Inside MBS & ABS

Fed Governor Views Housing-Finance Reform as ‘Now or Never,’ Opposes Reliance on a Duopoly

Federal Reserve Governor Jay Powell urged lawmakers to figure out a solution to the extended conservatorships of Fannie Mae and Freddie Mac, noting that a healthy economy and the risk to taxpayers make now an ideal time to act. In a speech this week at the American Enterprise Institute, Powell noted that the two government-sponsored enterprises are now in their ninth year of conservatorship. He worries that if reform doesn’t happen soon it may not happen at all. Powell said any change would be more challenging to enact during difficult economic times. “The risk that we settle into this current situation for the long run is...


July 6, 2017 - Inside Mortgage Finance

CFPB Reassures Servicers There Will Be No Repercussions for Violations of Early Implementation of Revised Servicing Rule

Mortgage lenders will not be subject to supervisory or enforcement actions for violations of the early implementation guidance for the revised 2016 mortgage servicing rule, according to the Consumer Financial Protection Bureau. The CFPB issued “non-binding” policy guidance last week to allay lenders’ fear of being penalized if they fail to implement the 2016 servicing amendments up to three days early, said industry attorneys. Issued in August last year, parts of the rules take effect on Oct. 16, 2017, and April 16, 2018. Technically, the “relief” applies...


July 6, 2017 - Inside Mortgage Finance

Many Non-QM Borrowers Look Eligible for GSE Mortgages, Save for One Disqualifying Issue

An analysis of non-qualified mortgages suggests that many of these borrowers have credit qualities strong enough to qualify for a mortgage that could be delivered to the government-sponsored enterprises. However, issues involving credit events and income documentation can disqualify such borrowers from conventional mortgages. According to an analysis by Morningstar Credit Ratings, the weighted-average loan-to-value ratio for securitized non-QMs is 75.2 percent and the average debt-to-income ratio on the loans is 36.6 percent. The rating service noted that QMs (including agency and non-agency mortgages) have an average LTV ratio around 69.0 percent and an average DTI ratio around 32.3 percent. In addition to showing that certain characteristics don’t differ much between QM borrowers and non-QM borrowers, the analysis suggests...


July 3, 2017 - Inside the CFPB

Other News in Brief

Might New Residential Get Sucked into Ocwen’s Struggle with CFPB? In a recent interview with IMFnews, an affiliated publication, New Residential Investment Corp. CEO Michael Nierenberg said the company’s servicing-related deal with Ocwen Financial is coming along and will be completed in the “near future,” though he declined to be specific.... Lawmakers Seeks to Exempt More Lenders From CFPB Exam Oversight. Last week, one member of the U.S. Senate and another from the House of Representative each separately introduced legislation that would increase from $10 billion to $50 billion the threshold figure at which regulated depository institutions are subject to direct examination and reporting requirements of the CFPB....


July 3, 2017 - Inside the CFPB

The Latest in Compliance: CFPB Rep Disputes Notion Bureau is More Active, Post-Election

A top official at the CFPB rejected industry claims that the bureau has backed off of rulemaking and amped up its enforcement activity in the wake of the 2016 elections. Speaking during a regulatory panel at the 2017 American Bankers Association’s regulatory compliance conference in Orlando last month, Virginia O’Neill, senior vice president for the ABA’s Center for Regulatory Compliance, said, “There seems to have been a pause in rulemaking. Yet at the same time, it feels like there’s an uptick in enforcement. It’s concerning to everybody out there.” Christopher D’Angelo, associate director of supervision, enforcement and fair lending at the bureau, disputed that perception. “There’s been a lot of chatter lately about this idea that somehow our enforcement activity ...


July 3, 2017 - Inside the CFPB

The Latest in Compliance: Lenders Still Confront Issues With ECOA Valuations Rule

The CFPB’s Equal Credit Opportunity Act Valuations Rule may not be much in the spotlight these days, but there are still some key compliance issues that test lenders. The rule updated ECOA’s Regulation B, requiring lenders to provide applicants for first-lien loans on a dwelling with copies of appraisals, as well as other written valuations, developed in connection with the application, whether or not the applicants request copies. One of the challenges of the rule involves timing, according to Elizabeth Fredrickson, a vice president at Wells Fargo Bank. “There’s a concern about the waiver provisions and the timing and having to get those really, essentially, more up front, than within the [required] timeframe,” she said during a panel discussion at ...


July 3, 2017 - Inside the CFPB

The Latest in Compliance: L.O. Comp Rule Seems to Work. Still, Document Everything

There has not been a lot of recent enforcement activity from the CFPB in terms of its loan originator compensation rule, but industry participants shouldn’t get complacent, according to some top compliance professionals. “We’ve seen the bureau say a couple different times that this is going to be a priority, and they’ve put out a few bulletins on this rule. But we’ve seen very little enforcement activity in this space,” said Maria Earley, a partner with the Reed Smith law firm in Washington, DC, during a panel discussion at the American Bankers Association’s 2017 regulatory compliance conference, held last month in Orlando. That being said, compliance professionals must not let their guard down. “Document everything. Step through with the regulators ...


July 3, 2017 - Inside the CFPB

The Latest in Compliance: Realities of the Mortgage Market Demand Changes to ATR/QM

The CFPB’s ability-to-repay/qualified mortgage rule hit the mortgage market at a difficult time and is compounding problems many homebuyers are having accessing credit, and the industry hope now is that the bureau will take the critical market dynamics into consideration as it undertakes its review of the ATR rule and revises it accordingly. That was one of the key takeaways from a breakout session at the American Bankers Association’s annual regulatory compliance conference last month in Orlando. “We understand why the rule came into existence, obviously. But what it did is typical when the pendulum goes too far in one direction, then things go too far the other way,” said Richard Andreano, a partner in the mortgage banking unit at ...


July 3, 2017 - Inside the CFPB

The Latest in Compliance: Industry Pro Details Efforts to Get Ready for TRID 2.0 Clarifying Rule

During the American Bankers Association’s 2017 regulatory compliance conference, held last month in Orlando, a top industry expert discussed and elaborated upon the work she and her colleagues have engaged in to prepare their institution for the upcoming TRID 2.0 clarifying rulemaking, which remains inexplicably delayed at the CFPB. Elizabeth Fredrickson, a vice president at Wells Fargo Bank, told an audience at a breakout session that her compliance team began with a “keep or kill” exercise back in March for all of the CFPB rules. “We brought stakeholders together and talked about what we liked and what we did not like, what we need and what we could do,” she explained. “Really, our conversation about TRID revolved around the fact ...


July 3, 2017 - Inside the CFPB

Court Puts Kibosh on State AG Request to Snag Sprint Funds

An effort by a handful of state attorneys general to intervene in an enforcement action brought by the CFPB against Sprint Corp. back in 2014 and lay claim to the unspent settlement funds will likely come to naught, after the U.S. District Court for the Southern District of New York blocked the effort. In its enforcement action, brought in December 2014, the CFPB accused Sprint of billing wireless customers tens of millions of dollars in unauthorized third-party charges from 2004 to 2013. The issue here involved charges for what are known as “premium text messages” or “premium short messaging services” because they are frequently delivered by text messages. Examples of such products and services include ringtones, wallpaper images, and text ...


July 3, 2017 - Inside the CFPB

CFPB Cuts Mortgage Servicers Some Slack for Three Days

The CFPB recently released some non-binding policy guidance on early compliance with the 2016 amendments to its 2013 mortgage servicing rules, including a three-day grace period. Each of the changes are scheduled to take effect on either Thursday, Oct. 19, 2017, or Thursday, April 19, 2018. This is a problem for mortgage servicers who face the very real prospect of operating under one set of rules one day and having to switch systems, policies and procedures to comply with another set of rules the very next day. The regulator acknowledged this was an issue and decided to give the industry what amounts to a three-day grace period. “The bureau has heard concerns that these midweek effective dates for the 2016 ...


July 3, 2017 - Inside the CFPB

New Legislation Would Exempt More Small Lenders From HMDA

Legislation is afoot in both the U.S. House of Representatives and the Senate that would significantly expand the scope of lenders exempt from the record keeping and reporting requirements under the Home Mortgage Disclosure Act. In late June, Rep. Tom Emmer, R-MN, introduced H.R. 2954, which would amend HMDA to expand the exemption thresholds that determine which depository institutions are subject to the act’s record maintenance and disclosure requirements. However, the triggers are based on the number of loans originated, not the asset size of the institution. Specifically, the bill would exempt depository institutions that originated fewer than 1,000 closed-end mortgages in each of the two preceding calendar years, and depositories that originated fewer than 2,000 open-end lines of credit ...


July 3, 2017 - Inside the CFPB

State Regulators See HMDA, Licensing Problems Emerge

One emerging issue identified by state mortgage regulators over the last year has to do with the Home Mortgage Disclosure Act, according to a new report issued by the Multistate Mortgage Committee. Specifically, MMC examination teams found numerous data discrepancies in the Loan Application Register (LAR) submissions, when compared to the data contained in the reportable loan files. “Within the review process, examiners seek to validate the accuracy of the LAR data submitted to meet the requirements of HMDA, and in multiple instances it was determined that the data was either inaccurate or incomplete,” the report said. As the CFPB works to update the HMDA submission process, which may eliminate some of these issues, the MMC said it will also ...


July 3, 2017 - Inside the CFPB

CSBS Calls for Community Bank Relief from HMDA Requirements

A representative of the Conference of State Bank Supervisors testified before the U.S. Congress recently, telling lawmakers that smaller financial institutions can’t engage in as much residential mortgage lending activity as they otherwise would because of the growing reporting requirements under the Home Mortgage Disclosure Act, as well as the CFPB’s ability-to-repay/qualified mortgage rule. In his testimony before the Senate Banking, Housing and Urban Affairs Committee, Charles Cooper, commissioner of the Texas Banking Department and immediate past chairman of CSBS, said the CFPB’s recent expansion of HMDA reporting requirements has placed a disproportionate burden on smaller and less complex institutions, potentially restricting mortgage lending as well. “In 2018, the number of data points required to comply with HMDA reporting standards ...


July 3, 2017 - Inside the CFPB

Cordray Gone By Year’s End? Who Will Replace Him?

The latest speculation inside the Washington, DC, beltway related to the departure of CFPB Director Richard Cordray is that he may resign sometime during the fourth quarter in order to run for governor of Ohio. But whether he leaves in the fourth quarter of 2017, or the first quarter of 2018, or he waits until his term expires in July of next year, one thing is certain: he will nevertheless be gone in just over a year’s time. That means President Trump will name his replacement. But who will that be? Will Trump tap avowed CFPB-killer House Financial Services Committee Chairman Jeb Hensarling, R-TX? Or perhaps Spencer Bachus, R-AL, the former head of the HFSC? What about Sen. Mike Crapo ...


June 30, 2017 - Inside Mortgage Trends

More Questions on Ocwen’s Future

An “excess” servicing deal tied to $117.0 billion of mortgage servicing rights between New Residential Investment Corp. and Ocwen Financial appears to be dragging on longer than expected, causing anxiety in some circles. The transaction – which changes the fees paid to Ocwen resulting in a short-term (gross) gain of $425 million – was unveiled on May 1 and has yet to close. Piper Jaffray analyst Kevin Barker and his team write in a recent report that the deal was slated to be ...


June 30, 2017 - Inside MBS & ABS

Policymakers Fault Fed’s QE Efforts, Mull Over Best Ways to Shrink Its Huge Portfolio Holdings

The Federal Reserve took some pointed criticism on Capitol Hill this week over its handling of monetary policy since the end of the Great Recession, including its support of the housing and mortgage markets through its unprecedented quantitative easing programs. “I don’t think the added gross domestic product growth we’ve had over the last 90 months will be proven to have been worth ballooning the balance sheet from $900 billion to $4.5 trillion,” Rep. French Hill, R-AR, said during a hearing this week by the House Financial Services Subcommittee on Monetary Policy and Trade. He also said...


June 30, 2017 - Inside MBS & ABS

Housing-Finance Reform Gets Started in Senate Banking Committee, Push to Finish Bill in 2017

Leading Republicans and Democrats on the Senate Banking, Housing and Urban Affairs Committee this week launched an ambitious effort to draft a bipartisan housing-finance reform bill, and possibly approve it by year end. Several lawmakers from both sides of the aisle cited a growing consensus about how that reform should be undertaken, with most agreeing on the preservation of the to-be-announced market and the need for an explicit government guarantee for MBS backed by conventional mortgages. Committee Chairman Mike Crapo, R-ID, listed...


June 29, 2017 - Inside Mortgage Finance

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...


June 29, 2017 - Inside Mortgage Finance

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...


June 23, 2017 - Inside MBS & ABS

Weaker Investor Protections Detected in Newer Nonprime RMBS Transactions vs. Prime Deals

Investors in nonprime MBS may be more vulnerable to fraudulent or defective mortgages compared to prime transactions because of deficiencies or inadequacies in the related representation-and-warranties frameworks, according to a new report from analysts at Moody’s Investors Service. “The collateral backing these transactions is riskier than the loans in post-crisis prime jumbo RMBS, which also generally use stronger frameworks,” the report said. For starters, “Transactions in the re-emerging non-prime RMBS sector are...


June 23, 2017 - Inside MBS & ABS

Liquidity in MBS and ABS Markets Seen as ‘Adequate,’ Although Lagging Activity in the Corporate Bond Market

Issuance volumes in various MBS and ABS sectors are generally below pre-crisis levels and liquidity in the markets is adequate, according to an analysis by the Financial Industry Regulatory Authority. But the structured finance sector hasn’t flourished as the corporate bond market has in recent years, according to FINRA. The non-governmental regulator of broker-dealers based its analysis in part on data collected by its Trade Reporting and Compliance Engine, which tracks trades in a variety of asset classes. The analysis was completed by FINRA’s Office of the Chief Economist. “Market liquidity [for MBS and ABS] seems...[Includes one data table]


June 22, 2017 - Inside Mortgage Finance

Lenders Still Have a Number of TRID Compliance Questions, May Take Years to Get the Rule Right

The Consumer Financial Protection Bureau’s integrated-disclosure rule has been in effect for more than 18 months now, and industry compliance professionals still have a number of questions in need of answers as they await the issuance of the so-called TRID 2.0 rule from the agency. The rule had been expected in the first quarter of 2017, but to date, not a peep has been uttered by the agency as to the cause of the delay or when lenders might expect the final rule. The Treasury Department recently issued...


June 22, 2017 - Inside Mortgage Finance

Nonprime Lenders Fill Variety of Niches, Many Programs With Less-Than-Full Documentation of Income or Assets

Lenders originating nonprime mortgages have a number of different programs for borrowers shut out of the agency market, including an emphasis on reduced documentation requirements. Deephaven Mortgage is among the lenders that have pooled newly originated nonprime home loans into mortgage-backed securities. The company’s recent $250.13 million MBS included a variety of loans, largely focused on non-qualified mortgages. Some 82.6 percent of the loans in the deal were...


June 22, 2017 - Inside Mortgage Finance

Is It Too Late to Delay New HMDA Requirements? Industry May Only Have Weeks to Make its Case

The month of July may very well be do-or-die time for policymakers to decide whether they should delay implementation of the Consumer Financial Protection Bureau’s new reporting requirements under the Home Mortgage Disclosure Act. “Regulators, and particularly members of Congress, don’t understand that if you’re going to delay the rule based on the technology implications of it, you really have to make a decision fairly far out before the rule becomes effective,” said Richard Andreano, a partner with the Ballard Spahr law firm in Washington, DC. He gave his remarks during a panel discussion at the American Bankers Association’s annual regulatory compliance conference, held in Orlando last week. In his judgement, July is...


June 19, 2017 - Inside the CFPB

Other News in Brief

House Fires Shot Across CFPB’s Bow, Passes Financial CHOICE Act. The GOP-controlled House of Representatives followed through on the majority’s often expressed intention to largely eviscerate the CFPB, passing H.R. 10, the Financial CHOICE Act, the Republican alternative to the Dodd-Frank Act. The measure passed on a vote of 233-186. All eyes now turn to the Senate Banking, Housing and Urban Affairs Committee, where Mike Crapo, R-ID, will play a pivotal role in Republican efforts to roll back the bureau. “Today’s passage of the Financial CHOICE Act is a significant and thoughtful effort to improve our financial regulatory system,” Crapo said after the vote. “Many of the provisions in this legislation are responses to the failures and consequences of Dodd-...


June 19, 2017 - Inside the CFPB

TRID Played a Huge Part in Mortgage Defects Last Year

More than 68 percent of mortgage defects reported in 2016 involved TRID-related and/or loan package documentation issues, according to the latest mortgage quality control industry trends report from ACES Risk Management (ARMCO). “In 2016, the entire lending industry was impacted by the enhanced regulatory oversight of the CFPB as the long-awaited implementation of TRID was fully realized,” the report noted. “Many lenders spent the better part of the first quarter addressing the multitude of mistakes associated with TRID.” In some instances, this produced loans that could not be sold on the secondary market. “A wave of corrective action followed, and soon the sheer amount of resources directed at solving these issues became overwhelming for many lenders,” ARMCO added. The top...


June 19, 2017 - Inside the CFPB

Should CFPB Delay New HMDA Requirements? Experts are Torn

Industry compliance officers, trade group representatives and legal experts at the American Bankers Association’s regulatory compliance conference, held in Orlando last week, expressed mixed sentiments about whether the CFPB ought to delay the effective date of the new requirements it is ushering in under the Home Mortgage Disclosure Act. They were responding to the suggestion of such a delay made by the Treasury Department in its recent report as per President Trump’s Executive Order 13772. “Obviously, a delay has to be for at least a year because the nature of HMDA is such that you can’t delay for six months,” Rodrigo Alba, the ABA’s senior vice president and senior regulatory counsel for mortgage finance, told an audience during a working ...


June 19, 2017 - Inside the CFPB

Pros Offer Tips on Nailing Down Third-Party Risk Management

Third-party oversight is becoming more of a focus of regulators these days, according to some top compliance professionals, and one of the most important emerging themes is an increasing regulatory emphasis on staff expertise. “This is something that [all the regulators] are thinking about,” Krista Shonk, vice president and senior regulatory counsel at the American Bankers Association, said during a presentation early last week at the ABA’s annual regulatory compliance conference in Orlando. Staff expertise includes things such as the ability to perform proper due diligence analysis and contract management and oversight. But personnel also need to avoid any attempts to transfer their institution’s inherent responsibility for compliance with laws and regulations. On the other hand, lenders should not put ...


June 19, 2017 - Inside the CFPB

Mortgage Servicing Amendments May Conflict With State Law

One of the top concerns among compliance professionals is the seeming inevitable conflict that the CFPB’s amendments to its mortgage servicing rules will have with various state laws – in particular, the possibility that compliance with one may put the servicer out of compliance with the other. That was one of the key takeaways from a break-out session early last week at the American Bankers Association’s annual regulatory compliance conference in Orlando. “One issue that comes up fairly frequently has to do with what a servicer should do when there is a conflict between state and federal law. We’ve seen this come up especially when it comes to the various early intervention notices that servicers have to send to delinquent borrowers,” ...


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