The House of Representatives last week passed legislation containing a provision to eliminate the cap on VA loan guaranty limits. Sponsored by Rep. Brad Wenstrup, R-OH, the “Veterans Employment, Education, and Healthcare Improvement Act,” H.R. 3016, included an amendment added by Rep. Lee Zeldin, R-NY, in committee. The amendment would eliminate the maximum loan amount the VA will guarantee, allowing more veterans to purchase homes in high-cost areas such as San Francisco and San Jose, CA. The bill was agreed to...

The Obama administration and Republicans in Congress recently released proposed federal budgets for fiscal year 2017, including provisions involving the government-sponsored enterprises. While both parties called for the GSEs to be eliminated, the system that will replace Fannie Mae and Freddie Mac remains a topic of intense debate, limiting prospects for action by Congress. “To finish addressing the weaknesses exposed by the financial crisis, the government must ...

On Jan. 20, the Department of Veterans Affairs published a Frequently-Asked-Questions (FAQ) guide to its qualified mortgage interim final Rule. We are picking up from where we left off last issue: Will VA still guaranty the loan if the Interest rate Reduction Refinance Loan (IRRRL) does not meet the recoupment period of less than 36 months, or does not meet the six-month seasoning requirements? Yes, VA will guaranty the loan. However, the loan will not have a safe harbor QM status. Instead, it will be a rebuttable presumption QM. VA does not condition the guaranty on satisfaction of all of the QM requirements. Lenders should consult their legal staff regarding safe harbor and rebuttal presumption QMs. What is the date that begins the seasoning and recoupment periods? The date of the note is the date on which legal obligations are established between borrower and lender. Therefore, to calculate the ...

Two Republican lawmakers in the House have raised questions about the diminishing capital held by Fannie Mae and Freddie Mac at a time when the two government-sponsored enterprises are expected to generate huge dividends for the government over the next decade. Reps. Stephen Lee (TN) and Mick Mulvaney (SC) recently asked the Federal Housing Finance Agency and the Treasury to consider the impact on the financial system and taxpayers of the GSEs holding no capital. They argue that Fannie and Freddie are already in violation of their statutory capital reserve requirements, and they will not be able to hold any capital after Jan. 1, 2018. “It is...

A recent amendment by Congress to the Telephone Consumer Protection Act was helpful for mortgage servicers but further action is necessary, according to industry participants. Servicers continue to raise concerns about the TCPA due to an order issued by the Federal Communications Commission in June. The order placed restrictions on auto-dialed calls to cell phones, subjecting servicers and others to penalties of $500 per call with no cap on statutory damages. The TCPA allows...

The mortgage banking and real estate industries this week called on the Department of Veterans Affairs to adopt policy changes to improve the VA Home Loan Guaranty program. In a hearing week before the House Committee on Veterans Affairs, Subcommittee on Economic Opportunity, the Mortgage Bankers Association and the National Association of Realtors offered several changes that could further enhance the program. Testifying on behalf of the MBA, James Danis II, president of the Residential Mortgage Corp., urged...

The FHA Mutual Mortgage Insurance Fund is projected to make $9.1 billion in profits in fiscal year 2017, but the Obama administration currently has no plans to cut FHA premiums. In fiscal 2016, the program is expected to generate $7.7 billion in profits, according to the White House proposed budget released this week. The administration projects FHA next year will insure $204 billion of forward single-family loans, with a negative credit subsidy of 4.42 percent for each loan, resulting in a projected profit of $9.1 billion. During a briefing this week. Julian Castro, secretary of the Department of Housing and Urban Development, downplayed...

The Republican-controlled House Financial Services Committee last week used the consideration of fiscal year 2017 budget views and estimates (BVE) as an opportunity to take another shot at the CFPB. The minority Democrats tried to amend the GOP package but were shut down on a party-line basis. According to the Republicans’ “print” of the FY17 BVE, the majority’s view is that although the Dodd-Frank Act established the CFPB within the Federal Reserve System, it assigns no role to Congress or the Federal Reserve in overseeing its budget or use of funds. “The effect of the CFPB’s unorthodox budgetary treatment is that every dollar it draws directly reduces the Federal Reserve System’s annual remittances to the Treasury, thus lowering the amount ...

TRID Webinar to Focus on Construction Lending Issues. The Federal Reserve next month plans to host officials from the CFPB to present a webinar on questions related to the bureau’s integrated disclosure rule in the context of construction lending. The event is to be held Tuesday, March 1, 2016, from 2 p.m. to 3 p.m. Eastern time. Those interested in viewing the live event may register online at https://www.webcaster4 .com/Webcast/Page/577/13246. Additional information and resources related to the TRID rule may be accessed at the CFPB’s website. CFPB the Target of House Republicans Again This Week. The House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit plans to examine the CFPB’s “assault on access to credit and trampling of ...

Housing reform legislation that would ease FHA restrictions on condominium financing and allow delegation of loan approval authority to qualified lenders under the U.S. Department of Agriculture’s rural housing programs this week passed the House by a vote of 427-0. Described as an FHA reform bill, H.R. 3700, the “Housing Opportunity Through Modernization Act,” would make several incremental changes across a number of federal housing programs. It would modify...