Mortgage lenders large and small have indicated they plan to stay away from making mortgages that do not fit into either the “safe harbor” or the “rebuttable presumption” QM boxes.
The MBA suggested the CFPB increase the "rebuttable presumption" threshold from 150 basis points above the average prime offer rate to 250 basis points so more borrowers with less-than-perfect credit can benefit.
It is not a matter of “if” or even “when” but rather “how” the remaining defendants settle lawsuits filed by the Federal Housing Finance Agency over billions in non-agency MBS sold to Fannie Mae and Freddie Mac in the years leading up to the housing crisis. Last week, the FHFA announced it recovered $7.88 billion in civil settlements in 2013 from seven of the 18 defendants the agency took to court in 2011. Eleven firms have yet to settle, with Bank of America facing the largest exposure because of its ownership of Countrywide Financial Corp. and Merrill Lynch, two of the largest issuers in the now-defunct subprime MBS market. In its original claim, the conservator of Fannie and Freddie accused...[Includes one data chart]
The tendency of borrowers with low credit scores to choose adjustable-rate mortgages over fixed-rate loans is more about economic considerations rather than a lack of financial sophistication, according to a study by Federal Reserve researchers. In the study, Fred Furlong, David Lang and Yelena Takhtamanova looked at factors that influenced lower-credit borrowers to select ARMs over fixed-rate mortgages during the housing boom in early 2000. In general, the research team observed ...
When it comes to the new QM rule lenders are operating from a position of fear. You can bet that mortgage attorneys in the Washington DC area have racked up the billable hours, holding their clients’ hands and supplying legal advice as the clock strikes midnight.
Jumbo MBS issuance isn’t likely to revive in the first quarter, and some market participants are starting to wonder if any new deals will get done by the end of March. With January almost at the mid-point there is talk that issuers – both active and wannabes – are shifting to a strategy of staying in the jumbo business as whole-loan traders as opposed to issuers. For now, it appears...
When the Consumer Financial Protection Bureau was working on the definition for qualified mortgages, some warned the regulator that only QMs would be available after the standards took effect. However, with the QM era set to begin Friday, a number of lenders will offer non-QMs even though such originations will come with increased liability. While interest-only mortgages don’t meet QM criteria, the loans will continue to be offered by lenders large and small. The government-sponsored enterprises won’t buy them, so the originations will be left to portfolio lenders and those with non-agency sales outlets. “We will continue making...
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