Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee, released the text of his pending regulatory relief bill last week. Among a handful of CFPB-related provisions is one that would grant qualified mortgage status under the bureau’s ability-to-repay rule for residential loans held in portfolio. However, as per the draft Financial Regulatory Improvement Act of 2015, certain conditions would have to apply. To begin with, the lender/creditor would have to hold the loan in portfolio from its inception, or any acquirer of the loan must continue to hold it in portfolio. Additionally, the mortgage cannot have been acquired through securitization, nor can it have certain forbidden features, like negative amortization, interest-only provisions, or a loan ...

A draft of legislation unveiled this week by Sen. Richard Shelby, R-AL, includes provisions that would support portfolio lenders and real estate investments trusts, among a myriad of other issues. Support from Democrats for some of the provisions in the draft has been tepid, and it’s not clear that President Obama would sign a bill without changes. The Financial Regulatory Improvement Act of 2015 aims to “improve access to credit and reduce the level of risk in our financial system,” ...

Residential mortgages held in portfolio would be granted safe-harbor qualified-mortgage status under draft regulatory relief legislation circulated early this week by Sen. Richard Shelby, R-AL, chairman of the Senate Banking, Housing and Urban Affairs Committee. To get that classification, the lender would have to hold the loan in portfolio from inception, and any person acquiring the loan must continue to hold it in portfolio. The loan cannot provide for negative amortization or interest-only payments, and the loan term could not exceed 30 years. Also, the lender would still have...

New lenders that specialize in loans that don’t meet the government’s qualified-mortgage standards continue to draw up blueprints and raise capital – or at least try to – but very few of them are banking on securitization as a take-out strategy. However, all that may change with the launch of LendSure Financial Services, a San Diego startup headed by a handful of veterans from the subprime industry of yesteryear, including Jim Konrath, Stu Marvin and Joe Lydon. According to one non-agency investor briefed on LendSure’s plans, securitization is...

Days after the full House of Representatives passed legislation that would amend the points-and-fees calculation in the CFPB’s ability-to-repay rule, the bill ran into some sudden resistance on the other side of Capitol Hill. H.R. 685, the Mortgage Choice Act, is a bipartisan bill that would clarify that certain affiliated title costs do not count against the “qualified mortgage” 3 percent cap on points and fees under the bureau’s ATR rule. H.R. 685, introduced by Rep. Bill Huizenga, R-MI, with dozens of co-sponsors from both parties, would exclude from the definition of points and fees all title charges, regardless of whether they are charged by an affiliated company, provided they are bona fide and reasonable. Lawmakers in the House passed ...

CFPB Community Bank Advisory Council Meeting April 22. CFPB Director Richard Cordray plans to discuss credit scores and credit reporting and the related implications for community banks when the bureau convenes the next meeting of its Community Bank Advisory Council on April 22, from 3:00 p.m. to 4:30 p.m., in Washington, DC. The event is scheduled to be held at the bureau’s location at 1275 First Street, N.E., and is open to the public, but an RSVP is required to attend. CFPB to Hold Research Conference May 7-8. The CFPB plans to host its first research conference May 7-8, 2015. The conference will focus on high-quality consumer finance research, with academic and government researchers presenting their research papers. “The goal ...

The Consumer Financial Protection Bureau’s ability-to-repay rule was an “over correction” in terms of income documentation standards, according to Peter Carroll, executive vice president for mortgage policy and counterparty relations at Quicken Loans. At a talk this week hosted by the Financial Services Roundtable and CoreLogic, Carroll said the ATR rule has limited Quicken’s originations of mortgages for borrowers who have significant income that’s accounted for outside of ...

The House of Representatives early this week passed H.R. 685, the “Mortgage Choice Act,” bipartisan legislation which would clarify that certain affiliated title costs do not count against the “qualified mortgage” cap on points and fees under the ability-to-repay rule. H.R. 685, introduced by Rep. Bill Huizenga, R-MI, with 37 co-sponsors from both parties, excludes from the definition of points and fees all title charges, regardless of whether they are charged by ...

Shortly before the U.S. Congress vacated the nation’s capital for its spring recess, the House Financial Services Committee passed, with varying levels of bipartisan support, a package of regulatory relief bills, including a handful related to rulemakings from the CFPB. Most notable among them is H.R. 685, the Mortgage Choice Act, sponsored by Rep. Bill Huizenga, R-MI. H.R. 685 aims to assist banks that originate mortgages through the wholesale channel by modifying the points-and-fees formula in the CFPB’s ability-to-repay rule. The measure would exclude from the calculation insurance and taxes held in escrow and fees paid to affiliated companies as a result of participating in an affiliated business arrangement. The committee approved the bill by a 43-12 vote, despite a ...

The Independent Community Bankers of America told the CFPB that it strongly supports some of the key proposed changes to the ability-to-repay/qualified mortgage rule. However, more must be done, including the establishment of a safe harbor for community bank mortgages held in portfolio. “[W]e strongly believe community bank loans that are held in portfolio, including balloon mortgage loans, should be considered QM loans that receive automatic legal safe harbor protections and an exception from any escrow requirements for higher-priced mortgage loans,” the trade group said in a comment letter. When a community bank holds a loan in portfolio, it has 100 percent of the credit risk, a direct stake in the loan’s performance and every incentive to ensure it is ...