A California mortgage lender that recently reached a settlement agreement with the Department of Housing and Urban Development over branch issues could land before HUD’s Mortgagee Review Board for branch-related loan quality issues. HUD’s Office of the Inspector General said an audit of Prospect Mortgage’s branches uncovered high default rates due to numerous violations of HUD underwriting and quality control requirements. The OIG recommended requiring Prospect to reimburse HUD $344,326 for ...

Some federally supervised depository institutions with FHA businesses are in danger of missing the July 29 deadline for registering with the Nationwide Mortgage Licensing System and Registry and could be sanctioned. The delay in registration is apparently due to confusion and uncertainty as to whether certain employees meet the definition of a “mortgage loan originator” (MLO) and should be registered as required by the Secure and Fair Enforcement for Mortgage Licensing Act, said compliance experts. The mortgage-related activities of such employees do not clearly meet the MLO definition and they include ...

The Consumer Financial Protection Bureau may have taken the field before its franchise quarterback has suited up, but that’s unlikely to slow agency examiners in making their appointed supervisory rounds. They’ve already introduced themselves to their largest bank charges and are fine-tuning their internal examination guidelines so that when they get the final authority to supervise non-banks, they will come calling without delay, according to industry presenters at the latest webinar sponsored by In-side Mortgage Finance. When the CFPB officially ...

Mortgage industry officials are pressing the Consumer Financial Protection Bureau to create a true legal safe harbor as it takes over a rulemaking project to implement ability-to-pay requirements enacted as part of the Dodd-Frank Act. Although the Federal Reserve drafted the proposed ability-to-pay rule, it did not take a firm stand on defining the legal protection lenders will get from originating “qualified mortgages.” Late last week, the project – which implements amendments to the Truth in Lending Act – was passed on to the CFPB. The Fed proposed rule contains ...

The U.S. Court of Appeals in Washington last week struck down a recent federal rule drafted to implement provisions in the Dodd-Frank Act, claiming that the agency did not properly weigh the economic costs and benefits of the new rule. As regulators across Washington, including the new Consumer Financial Protection Bureau, press to meet their Dodd-Frank mandates, opponents of the controversial law are turning to litigation over the rulemaking process to stymie new regulations. The appellate court action involved a Securities and Exchange Commission rule intended to allow ...

Some federally regulated depository institutions are scrambling to meet a July 29 deadline to register with the Nationwide Mortgage Licensing System and Registry to avoid possible sanctions by the Consumer Financial Protection Bureau. Although the covered institutions have begun registering their mortgage loan originators as required by the Secure and Fair Enforcement for Mortgage Licensing Act, there is some confusion about other employees whose mortgage-related responsibilities are not as clear cut as those of MLOs, said compliance experts. Such employees include those who ...

A year old this week, the Dodd-Frank Act remains as controversial as the day it was signed into law as critics continue trying to water down its impact by cutting funding for its implementation. Before the financial crisis, regulators weren’t properly funded to do their jobs, said Ben Bernanke, chairman of the Federal Reserve, during a hearing this week in the Senate Banking, Housing and Urban Affairs Committee. While the Dodd-Frank Act “does cover a lot” of the gaps, “quality is more important than quantity,” he said. But if money continues to be cut, it will be severely ...

The House Financial Services Committee this week passed legislation repealing a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that increased the liability of credit rating agencies for ratings they provide on asset-backed securities offerings. H.R. 1539, the “Asset-Backed Market Stabilization Act of 2011,” would restore Rule 436(g) is-sued by the Securities and Exchange Commission, which exempted nationally recognized statistical rating organizations, or NRSROs, from expert liability when they provide ratings for ...

Regulators of MBS markets should use a variety of tools to address inverse incentives in securitization, encourage markets to improve transparency and increase document standardization, according to a report released by the Joint Forum of the Bank for International Settlements. In its “Report on Securitization Incentives,” BIS said incentives in securities markets were misaligned in the crisis and still are today. “The major incentives at play for originators/sponsors included funding diversification, funding cost, risk transfer ...

Hedging will become much more expensive for Fannie Mae, Freddie Mac and the Federal Home Loan Banks than for anyone else as proposed new rules on the margining of uncleared derivatives will significantly increase the cost of trading, the GSEs warned federal regulators.GSEs regulated by the Federal Housing Finance Agency weighed in via comment letters on the rules proposed in April by the FHFA, as well as the Federal Reserve, the Farm Credit Administration, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency.