A bill to replace the Federal Housing Finance Agency with a beefed up Ginnie Mae and set Fannie Mae and Freddie Mac on a path to liquidation has been reintroduced in the House. The Partnership to Strengthen Homeownership Act was first introduced in July 2014 to wind down Fannie and Freddie over a five-year timeframe. Reps. John Delaney, D-MD, John Carney, D-DE, and Jim Himes, D-CT, are the lead sponsors of the measure. They said the bill takes the best ideas from both parties to create a housing finance system that combines the strengths of the private and public sectors.The congressmen agreed that things need to be done differently.

A House bill with bipartisan support would delay Basel III capital requirements relating to mortgage servicing rights for all but the largest banks. The House Financial Services Committee this week approved, 49-9, H.R. 1408, the Mortgage Servicing Asset Capital Requirements Act. Introduced by Rep. Ed Perlmutter, D-CO, the bill would require federal banking regulators to study the appropriate capital requirements for mortgage servicing assets for ...

Industry groups have rallied around a bill introduced to stop what a bipartisan group of senators call a “back door tax,” by raising guaranty fees. Sens. Mike Crapo, R-ID, and Mark Warner, D-VA, introduced the bill in Congress last week. The bill, S. 752, stipulates that a congressionally mandated increase of guarantey fees imposed on Fannie Mae and Freddie Mac business can only be used for deficit reduction. The goal is to prevent Congress from using Fannie and Freddie to fund unrelated spending. They also want to establish a scorekeeping rule to ensure that any increases in guaranty fees of the GSEs won’t be used to...

CFPB Updates TRID Documentation. Last week, the CFPB put out some updates to the implementation materials for its integrated disclosure rule under the Truth in Lending Act and the Real Estate Settlement Procedures Act. The updated material lines up with the rule that was published Feb. 19, 2015, that modifies the 2013 TILA/RESPA integrated disclosure rule (TRID). This rule extends the timing requirement for revised disclosures when consumers lock a rate or extend a rate lock after the Loan Estimate is provided and permits certain language related to construction loans for transactions involving new construction on the LE. Additionally, the bureau is making non-substantive corrections, including citation and cross-reference updates and wording changes for clarification purposes, to various provisions of ...

The FHA’s request for authority to require specialized subservicing in certain circumstances could be included in an appropriations bill rather than in housing-related legislation, according to Sen. Jack Reed, D-RI, ranking minority member of the Senate Appropriations Subcommittee on Transportation, HUD and other Related Agencies. Reed raised the possibility during a recent hearing on the Department of Housing and Urban Development’s FY 2016 budget proposal. Among other things, the FHA has been seeking authority from Congress to require, in individual cases, inexperienced lender/servicers to transfer the function to a specialized servicer to better assist borrowers and reduce losses to the Mutual Mortgage Insurance Fund. Allowing the FHA to require transfer of servicing will help more distressed homeowners stay in their homes and avoid foreclosure, said ...

There might be the usual hard line posturing on the part of both major political parties in the U.S. Congress on display when it comes to legislation related to the CFPB. But behind the scenes, top industry officials have no intention of letting up on the pressure they are trying to bring to bear on lawmakers to pass as many practical changes to bureau rulemakings as possible. “In the next two weeks, there will be several bills introduced dealing with less controversial but important elements of regulatory reform that we think will have bipartisan support,” said one mortgage industry executive in Washington, DC. Bills are expected to include provisions such as providing “qualified mortgage” status for many portfolio loans, with ...

Congress should encourage stronger credit enhancements and greater use of risk sharing to limit government exposure to mortgage losses, according to industry representatives. Testifying before the House Financial Services Subcommittee on Housing and Insurance, Rohit Gupta, president and chief executive of Genworth Mortgage Insurance, said the industry is not only highly capitalized and strongly regulated, but has a proven countercyclical credit enhancement that reduces taxpayer exposure. “We are...

Federal Reserve Chair Janet Yellen indicated this week that the central bank ultimately plans on holding few, if any, mortgage-related securities on its balance sheet. It seems unlikely there will be much in the way of actual sales of agency MBS by the Fed, which leaves run-off as the method of choice to drain the central bank’s portfolio. Delivering her semi-annual Humphrey-Hawkins testimony this week on Capitol Hill, the Fed chief said the FOMC intends to adjust its monetary policy during its normalization process mostly by changing its target range for the federal funds rate and not by actively managing its balance sheet. “The primary means of raising the federal funds rate will be to increase the rate of interest paid on excess reserves,” Yellen said. She also noted...

With it looking more likely that the GSEs could survive in some form, a critic of Fannie Mae and Freddie Mac has proposed changes he suggests would address most of the flaws he sees in the companies. Mark Calabria, director of financial regulation studies at the Cato Institute, a libertarian think tank, said he offered the suggestions “in the spirit of lively debate.” He suggested that the federal government should open GSE charters to competition, allowing any firm that can meet the requirements to receive a GSE charter. Calabria said GSEs should have a capital requirement of at least 8.0 percent. Capital of 4.0 percent to 5.0 percent would have covered the losses Fannie and Freddie experienced in 2007, according ...

As Republican leaders in Congress stake out hard-line positions on structural changes to the Consumer Financial Protection Bureau, Democrats are responding by digging in their heels, raising the prospects of more gridlock. Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee, recently stated his desire to pull the CFPB within the orbit of the congressional appropriations process. He is also interested in changing the leadership structure of the bureau from a single director to a governing board. Ranking Member Jeff Merkley, D-OR, and other Democrats are opposed...