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...

The Federal Housing Finance Agency has proposed a rule to acquire explicit discretionary authority to require Fannie Mae, Freddie Mac or any of the 12 Federal Home Loan Banks to undergo a stress test every year, no matter how much the GSEs have in consolidated assets. The proposed rule, published in the Oct. 5 Federal Register, would implement a part of the Dodd-Frank Act, which requires certain financial companies with consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct an annual stress test.

The mortgage lending industry is universally opposed to a Consumer Financial Protection Bureau proposal to establish a new, more comprehensive “all in” annual percentage rate formula that would include various additional fees and charges. The APR provision is one part of the CFPB’s extensive proposed rule intended to simplify and integrate the mortgage disclosures consumers are entitled to under the Truth in Lending Act and Real Estate Settlement Procedures Act. The overhaul was mandated by the Dodd-Frank Act. In the proposed rule, which came out in July, the bureau would replace...

Opponents of the Dodd-Frank Wall Street Reform and Consumer Protection Act that created the CFPB are finding some initial success in chipping away at various provisions of the law through legal challenges. So far, authorities of the bureau itself have escaped the crosshairs of such legal challenges. However, the legitimacy of President Barack Obama’s appointment of Richard Cordray as director of the CFPB has been challenged in a round-about manner. So far, federal regulators have twice lost in court in their efforts to defend some of the rules they put in place...

Unanticipated complications with the Dodd-Frank Act appear to have caused Fannie Mae and Freddie Mac to miss a Sept. 30 deadline set by the Federal Housing Finance Agency to initiate risk-sharing transactions with non-agency investors. However, FHFA officials said they continue to work with the government-sponsored enterprises on the issue. “Risk sharing is a complex process that requires time to assess market opportunities, structural considerations, make operational changes, and develop proper risk metrics and controls,” an FHFA spokesman said. “We are moving forward steadily and expect to continue making progress in the coming months.” FHFA officials would not comment...

While President Barack Obama and his Republican challenger, Gov. Mitt Romney, differ widely on key issues, both candidates appear to agree on the need to reduce the government’s role in housing and bring private capital back to the mortgage market, industry observers say. Nothing much has been said in public forums or in the first presidential debate (except for a brief mention of the “qualified mortgage” proposal) about the housing issue, but observers say their positions on FHA may not be far apart. Obama’s approach to the housing crisis is ...

It looks like the controversial risk-retention proposal won’t be issued by federal regulators until sometime next year, as major components of the Dodd-Frank Act remain in limbo. “I think much of the Dodd-Frank regulatory process is on hold until after the elections, and we’re unlikely to see decisions on most major issues until sometime in 2013,” said Steven Abrahams, an analyst at Deutsche Bank Securities. “The only process that seems to be rolling is the one run by the Consumer Financial Protection Bureau to define mortgage origination and servicing standards.” As he sees it, “the first half of next year will probably see...

Former Massachusetts Governor Mitt Romney aims to replace the Dodd-Frank Act and reform the government-sponsored enterprises, according to the latest housing policy statement from the Republican presidential candidate and Rep. Paul Ryan, R-WI, his vice presidential running mate. “The Romney-Ryan plan will reduce the outsized role of the government and revitalize the private sector’s role in the housing market to end the housing crisis and preserve the American dream of homeownership,” according to ...