The CFPB brought the hammer down on a handful of nonbank mortgage companies in the last two weeks over advertising practices the bureau asserts are deceptive and misleading because, in three of the cases, the lenders allegedly implied U.S. government approval of their products or otherwise suggested the companies were agencies of the federal government when in point of fact they were not. The actions are a confirmation to the industry that lenders don’t have to be big players with deep pockets or even depository institutions to earn the bureau’s wrath. They are also a big wake-up call in terms of compliance. “For decades, many lenders which have used direct mail to market to consumers have emphasized the government-insured nature ...
In an unannounced development late last week, the CFPB granted an industry request to tweak its pending integrated disclosure rule by issuing a final rule allowing a three-business-day window for lenders to revise a loan estimate form. This is longer than the one-day window that was proposed back in October and the same-day requirement included in the original mortgage disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The bureau received comments from industry trade associations, creditors, technology vendors, and other industry representatives addressing the proposed change. All comments supported the proposal to relax the timing requirement, but most advocated extending it to three business days. Most commenters argued that a next-business-day requirement presents ...
Jack Guttentag, professor of finance emeritus at the Wharton School of the University of Pennsylvania, advises borrowers to ignore the CFPB’s controversial online rate checker tool. “It is completely useless,” he asserted in a recent online blog post. “The tool a borrower needs is a ‘shopping rate,’ a rate that a competing lender should match or better. The CFPB shows a distribution of rates, and leaves it to the shopper to decide which rate in the distribution is the shopping rate, while providing no guidance on how to do it.” For example, given the loan features he entered on Feb. 10, the CFPB tool told Guttentag that, “In Pennsylvania, most lenders in our data are offering rates at or below ...
With many small and mid-tier mortgage companies and banks increasingly worried about straying from compliance with the CFPB’s expanding rules and requirements, vendor representatives are working overtime to alleviate their clients’ anxieties and keep them on task and on budget. “We’re really seeing a lot of fear in the CFPB’s steadily intensifying regulations and requirements,” said Mary Beth Doyle, founder and co-owner of Loyalty Express, a mortgage marketing technology vendor in Woburn, MA. As recently as a year or a year-and-a-half ago, companies were saying they would wait to hear about a new rule themselves from the CFPB. “And today, people are more panic driven. There’s this sense of paralysis because everyone’s afraid of stepping out of bounds and not ...
pmuolo@imfpubs.com Fannie Mae posted a net profit of $1.3 billion in the fourth quarter, a 66 percent decline sequentially, blaming the earnings downdraft on a reduction in the fair value of its derivatives. The GSE “derivative problem” also plagued the fourth quarter results of Freddie Mac, which reported a slim profit of $227 million after writing down its derivatives by $3.4 billion.
Disclosure of findings from third-party due diligence on MBS and ABS are set to go from a few paragraphs in a rating report to a detailed form with certification from the due diligence firm, thanks to standards established by the Securities and Exchange Commission. The standards take effect for deals that price June 15 or later. Within five days before the first sale in an offering that will receive a rating, the findings and conclusions of any third-party due diligence report obtained by the issuer or underwriter must be disclosed in Form ABS-15G or the rating report. The disclosure requirement applies to private placements along with SEC-registered deals. “Our biggest challenge now is educating...
Securitization was still the dominant method to fund new home mortgage production in 2014, but Wall Street got a run for its money from portfolio lenders. A new Inside MBS & ABS analysis reveals that 70.5 percent of residential mortgages originated last year were funneled into mortgage securities. That was down from 78.5 percent in 2013 and represented the lowest mortgage securitization rate since 2006. Delivering eligible loans into new Fannie Mae, Freddie Mac and Ginnie Mae securities is...[Includes one data chart]
Industry participants in the Treasury Market Practices Group raised questions about the tax consequences and other issues involved in the plan to develop a “single security” in a meeting with the Federal Housing Finance Agency last month. The recently released minutes of the meeting do not provide much detail. The FHFA representatives described in broad terms the project to create a fungible MBS that Fannie Mae and Freddie Mac would both issue in the to-be-announced market. In response, “Most TMPG members noted...
AAMC said that while at BofA, Ellison was “the executive leading the team that managed the valuation and disposition of Bank of America’s legacy mortgage loan portfolio.”