The Department of the Treasury and state banking regulators strenuously objected to a proposed rule issued by the Office of the Comptroller of the Currency regarding federal preemption of state consumer financial law even as calls to withdraw the proposal or reopen its comment period mounted. As the comment period ended June 27, the Treasury Department responded unfavorably to the preemption rule proposed by one of its own bureaus, saying that the agency’s approach is incompatible with the federal preemption text of the Dodd-Frank Act and its ...

The strength of the non-agency market has become a major point of concern as a diverse coalition of market participants lobbies for changes to a proposed rule for mandatory risk retention. The impact on the non-agency market is second only to the group’s concerns about downpayment requirements in the qualified residential mortgage debate. “The proposed narrow QRM rule discourages...

The challenges confronting the recovery of the non-agency MBS market are many, but legacy issues, such as representations and warranties, are the cause of huge frustration in the industry, according to panelists at the American Securitization Forum this week. “Some of these legacy issues have very far-reaching tentacles,” observed Mani Sabapathi, principal at Prudential Fixed Income. The housing finance world has been bracing for the coming risk-retention rule with great apprehension, he said, raising the possibility that reps and warrants could be included as a part of it. “I think it can be an important aspect to the extent that if you have these loans that don’t meet...

Mortgage servicers are being squeezed by inadequate compensation, intense scrutiny and a surge of new regulation, but Fannie Mae and the Treasury Department say they are trying to even the score. Servicers no longer see their job as financially rewarding and have been leaving their positions accordingly, claimed Diane Pendley, managing director of Fitch Ratings, during a panel session at this week’s annual meeting of the American Securitization Forum. “We’re seeing them fighting – they’re coming out swinging, just really to get some balance,” echoed Gwen Muse-Evans, vice president and chief risk officer at Fannie Mae. “There’s definitely a perception that...

A bill that would create a legislative framework for a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank system, cleared committee this week following some fine-tuning by its sponsors and is headed to the full House for consideration.The House Financial Services Committee voted 44-7 in favor of H.R. 940, the U.S. Covered Bond Act of 2011.

Top servicers flagged for their faulty foreclosure practices will have an extra month to submit their mitigation plans, although federal regulators continue to bear down on the industry and are starting to withhold loss mitigation incentive payments from some companies. The Office of the Comptroller of the Currency and the Office of Thrift Supervision this week said they will give 12 servicers subject to consent orders extra time to submit “comprehensive action plans” that detail the financial resources the bank will commit to...

Office of the Comptroller of the CurrencyFederal Reserve SystemFederal Deposit Insurance Corp.Securities and Exchange CommissionFederal Housing Finance AgencyDepartment of Housing and Urban Development Credit Risk Retention – Proposed Rule: Comments Due. Public comments on the interagency proposed rule on credit risk retention are due June 10, 2011. (See...

Savings institutions reported a total of $200.9 billion of residential MBS in their retained portfolios at the end of the first quarter of 2011, up marginally from the end of the previous year. But the heart of the industry – firms regulated by the Office of Thrift Supervision – actually posted a small decline in their MBS holdings during the period. The OTS itself is being phased out as a separate federal regulator, although the savings association charter will continue under the supervision of a dedicated unit in the Office of the Comptroller of the Currency. OTS-regulated thrifts held $157.6 billion of MBS in their portfolios at the end of... [Includes two data charts]

While federal agencies gather comments on a proposed rule to establish margin and capital requirements for various swap entities, experts say it’s not altogether clear how the proposed rule would apply to the GSEs. Final comments are due June 24 on a rule proposed by five federal agencies that would require swap entities regulated by the agencies to collect minimum amounts of initial margin and variation margin from counterparties to non-cleared swaps and non-cleared security-based swaps. The five agencies that issued the proposed rule last month are the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corp...

Industry representatives are making headway in obtaining clarification from the Federal Reserve on various aspects of the agency’s controversial regulation on loan originator compensation. But there are a number of key questions that still have to be addressed, and until they are, lenders need to proceed carefully, according to a top official at one of the nation’s largest mortgage lenders. One area in which the industry needs clarification has to do with compensation based on “time spent” as it pertains to different loan programs and products, and whether compensation can be established on a loan-by-loan basis or by...