The pessimistic pricing in the secondary market for jumbo mortgage-backed securities with exposure to the oil industry might be unwarranted, according to Standard & Poor’s. The rating service completed a stress test on the 59 jumbo MBS issued in 2012 and beyond. “Assuming the entire oil-sector workforce in three major oil-producing states defaults on their mortgages, even under extreme economic stress, the incremental collateral pool losses ... [Includes three briefs]
The CFPB’s ability-to-repay rule with its qualified mortgage standard has not dampened mortgage credit availability – market dynamics did that before the rule kicked in, according to a new analysis from the Urban Institute’s Housing Finance Policy Center. “The second anniversary of the QM rule is an appropriate occasion to evaluate the rule’s impact on credit availability,” Research Associate Bing Bai, Director Laurie Goodman and Senior Fellow Ellen Seidman wrote in a brief published late last month. The data they reviewed suggest that the impact of QM has been small: mortgages with interest-only features and prepayment penalties were virtually extinct before QM took effect; the adjustable-rate mortgage share of the market still tracks interest rate changes; and the share of loans ...
Ellington Financial is increasing its investments in non-qualified mortgages as officials at the nonbank expect strong profits from the loans. Ellington held $9.2 million in non-QMs at the end of 2015, up from $3.5 million at the end of the third quarter. The nonbank started financing purchases of non-QMs under a facility with an unidentified “large investment bank” in January. “While it took a little longer than I had hoped to get here, the non-QM pipeline will have a meaningful ...
Determining a borrower’s ability to repay a bank-statement mortgage is more complicated than evaluating a borrower underwritten with full income documentation, according to a recent report by Moody’s Investors Service. The rating service noted that originations of bank-statement loans tend to be non-qualified mortgages for self-employed borrowers. “The quality of loans originated through bank-statement income documentation programs depends heavily on ...
The Consumer Financial Protection Bureau last week published its policy for issuing no-action letters for certain innovative financial products. Lenders had called for the policy but industry analysts caution that no-action letters from the CFPB won’t necessarily be helpful. Under the policy, lenders can apply for a no-action letter from the CFPB. The regulator said it will review applications for such letters and in certain circumstances indicate that ... [Includes three briefs]
The mortgage banking and real estate industries this week called on the Department of Veterans Affairs to adopt policy changes to improve the VA Home Loan Guaranty program. In a hearing week before the House Committee on Veterans Affairs, Subcommittee on Economic Opportunity, the Mortgage Bankers Association and the National Association of Realtors offered several changes that could further enhance the program. Testifying on behalf of the MBA, James Danis II, president of the Residential Mortgage Corp., urged...
The Department of Veterans Affairs has issued guidance to help VA lenders understand better the agency’s interim final rule on a borrower’s ability to repay and qualified mortgages. The guidance was published in a frequently asked questions (FAQs) format to clarify and explain both the VA’s ATR and QM standards. The VA interim final rule became effective on May 9, 2014, the date it was published in the Federal Register. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires residential mortgage lenders to make a reasonable and good faith determination that the consumer has a reasonable ability to repay the loan according to its terms. The statute directed the Consumer Financial Protection Bureau to develop and implement an ATR/QM rule. Under the CFPB’s final rule, a qualified mortgage is a category of loans that have certain, more stable features that ...
The Department of Veterans Affairs and the U.S. Department of Agriculture Rural Housing Service have issued 2016 guidelines for lending to borrowers who have gone through a bankruptcy, foreclosure or a short sale. Under VA guidelines, borrowers emerging from a previous Chapter 7 bankruptcy may apply for a VA loan two years after the bankruptcy discharge. Borrowers with a Chapter 13 bankruptcy may qualify for a new VA loan if they have made at least 12 months of payments and the lender concludes that they have reestablished satisfactory credit. Before the bankruptcy-tainted borrower applies for a VA loan, however, the trustee or the bankruptcy judge must approve the new loan. The lender may put in a good word on behalf of the borrower provided the latter has met all requirements for a new loan. Borrowers may apply for a VA loan two years after a foreclosure or a short sale. In the case of ...
On Jan. 21, 2016, the FHA issued a reminder to lenders to register for one of the three remaining phases of Electronic Appraisal Delivery (EAD) Onboarding, before the electronic appraisal submission requirements become mandatory on June 27, 2016. The remaining onboarding phases are the following: Feb. 15-April 15 (registration closes on Feb. 14); March 15-May 15 (registration closes March 14); and April 15-June 15 (registration closes on April 14). All appraisals for FHA case numbers assigned on or after June 27, 2016, must be submitted to FHA through the ...
With nonbanks fearing they could be stuck with error-laden mortgages that violate the integrated disclosure rule, a secondary market has developed for this new breed of “scratch and dent” loans, according to interviews conducted by Inside Mortgage Finance. One investor, requesting his firm’s name not be identified, said his shop bought such a mortgage for 90 cents on the dollar. Participants in the market – including investors and traders – concede...