The Consumer Financial Protection Bureau has issued its long-awaited “qualified mortgage” ability-to-repay final rule that, as expected, includes an exception for Fannie Mae and Freddie Mac mortgages and does little to facilitate a rebound in the non-agency sector. Mortgage lenders will be presumed to have complied with the ability-to-repay rule if they originate “qualified mortgages” that prohibit or limit the risky features believed to have harmed consumers in the recent mortgage crisis. That means...

The final rule issued by the Consumer Financial Protection Bureau this week to define ability-to-repay requirements and “qualified mortgages” puts non-agency and subprime mortgages at a significant disadvantage to prime and agency mortgages. The slant against non-agency loans goes beyond what was required by the Dodd-Frank Act, according to industry analysts. The rule is set to take effect Jan. 10, 2014. Under the final rule, qualified mortgages must meet...

The Consumer Financial Protection Bureau this week issued a final rule setting new restrictions and requirements for high-cost mortgages. The rule implements requirements set by the Dodd-Frank Act and will take effect in January 2014. For first-lien mortgages, high-cost loans have annual percentage rates 6.5 percentage points or more above the average prime offer rate. The APR threshold for second liens is 8.5 percent above the APOR. The DFA expanded the definition of high-cost mortgages to include purchase mortgages and home-equity lines of credit in addition to refinances. The CFPB noted...

Mortgage industry participants are confident that newly confirmed FHA Commissioner Carol Galante will deliver on reforms she committed to in an effort to reach out to Republican critics. Eighteen Senate Republicans veered away from their hardline party colleagues to help Carol Galante secure confirmation of her nomination as the Department of Housing and Urban Development’s chief overseer of the FHA mortgage insurance program and overlord of housing policies. Galante broke through the GOP firewall Dec. 30 after the Senate voted 69 to 24 to approve her nomination. She needed at least 60 votes to ...

Staff at the Securities and Exchange Commission this week recommended that the agency do more research before making a decision on how to implement a controversial provision in the Dodd-Frank Act involving random assignments of credit ratings in structured finance. Sen. Al Franken, D-MN, was the major proponent of a requirement that the SEC study the feasibility of creating a government body that would pick which credit rating agency would evaluate new non-agency MBS, non-mortgage ABS, commercial MBS and other structured finance transactions. The provision, Sec. 15e(w) of the Dodd-Frank Act, essentially requires the SEC to implement the new system unless the agency determines that an alternative system would better serve the public interest and protect investors. Although some investors and rating services support the Sec. 15e(w) concept, most securitization market participants oppose...

The CFPB has a pretty full plate digesting hundreds of comments related to its mortgage servicing proposed rule, making it difficult to predict how the final product might end up as it presses to balance the industry’s legitimate concerns with the regulatory mandates of the Dodd-Frank Wall Street Reform and Consumer Protection Act. During a recent webinar sponsored by Inside Mortgage Finance, an affiliated publication, Mitchell Hochberg, counsel in the division of research, markets and regulations at the CFPB...

The U.S. Senate has unanimously passed legislation guaranteeing that privileged information provided to the CFPB will remain confidential, ending months of lender uncertainty about the disclosure of privileged and confidential information to the powerful new bureau. H.R. 4014, introduced in March by Rep. Bill Huizenga, R-MI, adds the CFPB to the list of federal agencies that are permitted to share the privileged information of a regulated entity with other federal agencies without waiving any state...

House Oversight and Government Reform Committee Chairman Darrell Issa, R-CA, and Financial Services Subcommittee Chairman Patrick McHenry, R-NC, released a harshly critical report of the CFPB, asserting the bureau’s structure and mandate will dry up credit for large swaths of the American people. “At a time of prolonged economic strain, American consumers can ill-afford such an unaccountable, unresponsive and all-powerful financial regulator,” the report began. The document also cited a Federal Deposit...

Those fee disclosure stickers seen at automated teller machines across the U.S. as per the Electronic Fund Transfer Act are slated to become a thing of the past, after a vote by the Senate cleared the way for the CFPB to eliminate the requirement. The Senate recently followed up on action by the House of Representatives and approved H.R. 4367, legislation that amends the EFTA to eliminate the law’s requirement that a fee disclosure be placed in a prominent and conspicuous location on or at an ATM. Critics say the ...

As the wait for the highly anticipated “qualified mortgage” final rule continues, its impact on FHA lending programs remains uncertain. Concerns have been raised over the possibility that the final QM rule the Consumer Financial Protection Bureau is finalizing may establish a “safe harbor” for prime loans with a maximum debt-to-income ratio of up to 43 percent. This could have implications for FHA loans, which allow higher back-end ratios under certain circumstances, according to some lenders and industry participants. At what point the DTI ratios will ...