Well-informed sources in Washington, DC, are suggesting that Richard Cordray, head of the CFPB, is interested in moving on before the end of his term, despite the fact that the election results strengthen the hand of the agency he’s running. Under the Dodd-Frank Act, the director of the bureau is appointed to a five-year term by the president, with the advice and consent of the Senate. Cordray was nominated by President Obama, but was not confirmed by the U.S. Senate. He therefore may serve as a recess appointee until...

The CFPB has put out the second iteration of its Supervision and Examination Manual, the guide bureau examiners use in overseeing companies that provide consumer financial products and services. The manual describes how the CFPB supervises and examines these providers and gives its examiners direction on how to determine if companies are complying with consumer financial protection laws. The bureau updated the supervision manual to reflect the renumbering of the consumer financial protection regulations for which the CFPB...

Dodd-Frank Repeal? No. Corrections? Maybe. There will be no repeal of 2010’s landmark Dodd-Frank Wall Street Reform and Consumer Protection Act as a result of President Barack Obama’s re-election and the Democratic Party’s retention of control of the U.S. Senate, according to a post-election briefing by Wolters Kluwer. “However, a bipartisan Dodd-Frank Act corrections bill is very likely to pass in the 113th Congress that will convene in January 2013,” the firm continued, citing recent remarks by Sen. Mark Warner, D-VA...

The United States just concluded an electoral campaign season that involved the expenditure of billions of dollars and resulted in no change in the balance of power on the federal level, beyond strengthening Democrats’ control in the U.S. Senate. But that doesn’t mean nothing important is going to happen over the next four years. Securitization industry officials, Washington insiders, political observers and policy wonks all expect hard financial realities to compel policymakers into responding to a host of issues that will significantly affect housing finance and securitization. “We don’t think the ‘status-quo election,’ as some have called it, means status quo for residential mortgage finance,” said Karen Shaw Petrou, a managing partner at Federal Financial Analytics, a Washington, DC, think tank. She thinks...

A final rule from the Consumer Financial Protection Bureau defining “qualified mortgages” could come as soon as this month. Participants in the non-agency mortgage market appear to be anxiously awaiting the QM rule that will establish ability to repay standards and the related qualified-residential mortgage rule on risk retention for securitized mortgages. “At least tell us what the rules of the road are, then we can react,” Eric Kaplan, a managing director at Shellpoint Partners, said at the recent ABS East ...

Lenders are seeking exemptions large and small from proposed appraisal requirements aimed at subprime mortgages. Without the exemptions, industry participants warn that borrowers will face higher costs and some lenders will stop originating what they claim are vital subprime mortgages. In August, federal regulators proposed requiring a physical inspection of a property’s interior by a qualified appraiser for originations of “higher-risk mortgages.” If a property was sold within 180 days at a lower price ...

Mortgage market watchers should expect “business as usual” from a second Obama administration as the White House and Congressional Democrats are poised to preserve gains under the Dodd-Frank Act, including the Consumer Financial Protection Bureau. Both parties say they want to resolve the conservatorships of the government-sponsored enterprises, but experts say the necessity of addressing budget and tax issues will trump all other considerations next year. “Clearly a second term for the Obama administration would be business as usual as best they can,” explained Timothy McTaggart, partner at the Pepper Hamilton law firm during a pre-election webinar. “I don’t think Dodd-Frank will remain sacrosanct for all time. I think during a second term the [regulatory] agencies will get past the point of having to put the rules out, they will get some feedback and they will start making it known where they see gaps or deficiencies.” Karen Shaw Petrou, managing partner of Federal Financial Analytics, said...

Rep. David Schweikert, R-AZ, said this week that in the coming months he will introduce bipartisan legislation to establish a regulatory framework for prime non-agency MBS. “I’ve spent the last two years trying to figure out what the box will look like,” he said. Non-agency MBS participants continue to debate whether reform of the government-sponsored enterprises is necessary before the non-agency MBS market can return in a meaningful manner. At the ABS East conference sponsored by Information Management Network this week in Miami, Schweikert said a functioning non-agency MBS market is necessary before members of Congress can be convinced to move forward with GSE reform. “I need to have...

It increasingly appears that the Consumer Financial Protection Bureau will come out with a qualified mortgage/ability-to-repay rule that will include a legal “safe harbor” for most mortgages – and a “rebuttable presumption” for the rest. Industry attorneys, lobbyists and consumer advocates indicate the CFPB is leaning towards granting a safe harbor for what will be defined as “prime” mortgages – presumably most of the loans that are backed by the federal government. “What we’re hearing is there could be...

The Commodity Futures Trading Commission late last week issued a temporary exemption for “securitization vehicles,” including MBS, from burdensome rules required by the Dodd-Frank Act regarding commodity pools. The exemption from rules for swaps lasts through the end of the year and was detailed in a series of no-action letters. Industry participants including the American Securitization Forum and the Securities Industry and Financial Markets Association requested the no-action letter from the CFTC for rules that went into effect on Oct. 12. The groups warned that applying the new regulation to MBS with simple interest rate swaps would harm the market for new issuance as well as outstanding securities. “This legal and regulatory uncertainty could have...