While policymakers in Washington, DC, are paying renewed attention to housing-finance reform, some industry representatives took advantage of the opportunity provided by a related hearing on Capitol Hill to also urge changes be made to a number of the mortgage-related rules promulgated in recent years by the Consumer Financial Protection Bureau. Bond giant PIMCO issued a report that called for a handful of key revisions to the mortgage regulatory landscape before any reform of Fannie Mae and Freddie Mac is undertaken. “To bring capital back to the private mortgage market and ensure credit is extended...

Pacific Investment Management Company published an opinion piece this week calling for changes in the non-agency market before policymakers enact reforms that affect the government-sponsored enterprises. PIMCO was also critical of other GSE reform proposals. “Without a functioning private mortgage market, it will be nearly impossible for the GSEs to shrink their footprint without significant disruption to the housing market and to the underlying homeownership rate,” PIMCO said. PIMCO was...

The CFPB recently published long-awaited updates to its “Know Before You Owe” integrated disclosure mortgage rule, finalizing, among other things, amendments on finance charge disclosures, disclosures tied to housing assistance that a borrower receives, and when information can be shared with third parties, including real estate agents. The KBYO rule took effect in early October 2015 as part of an effort to simplify disclosures under two laws: the Truth in Lending Act and the Real Estate Settlement Procedures Act. The lending industry commonly refers to the combined disclosures as TRID, short for TILA/RESPA Integrated Disclosure rule. In a statement on the amendments, the CFPB noted that TRID “changed the total of payments calculation so that it did not make specific...

In addition to the so-called TRID 2.0 final rule, the CFPB recently issued a notice of proposed rulemaking related to what’s known in the mortgage industry as TRID’s “black hole,” which refers to situations in which a lender is not permitted to use a closing disclosure to reset fee tolerances. More specifically, the proposal addresses when a creditor may use a Closing Disclosure (CD), instead of a Loan Estimate (LE), to determine if an estimated closing cost was disclosed in good faith and within tolerance. Currently, lenders are permitted, under certain limited circumstances, to use revised estimates, instead of the estimate originally disclosed to the borrower, to compare to the charges actually paid by or imposed on the borrower in...

After a few months of delay, the Consumer Financial Protection Bureau last week issued its long-awaited final rule clarifying a number of aspects of its integrated disclosure rulemaking under the Truth in Lending Act and the Real Estate Settlement Procedures Act, otherwise known as TRID 2.0. The most noteworthy revisions relate to good faith and revised disclosures, calculating cash to close, construction-to-permanent loans, and the sharing of disclosures during the origination process. In terms of good faith and revised disclosures, the 2017 TRID rule provides...

Mortgage lenders will not be subject to supervisory or enforcement actions for violations of the early implementation guidance for the revised 2016 mortgage servicing rule, according to the Consumer Financial Protection Bureau. The CFPB issued “non-binding” policy guidance last week to allay lenders’ fear of being penalized if they fail to implement the 2016 servicing amendments up to three days early, said industry attorneys. Issued in August last year, parts of the rules take effect on Oct. 16, 2017, and April 16, 2018. Technically, the “relief” applies...

During the American Bankers Association’s 2017 regulatory compliance conference, held last month in Orlando, a top industry expert discussed and elaborated upon the work she and her colleagues have engaged in to prepare their institution for the upcoming TRID 2.0 clarifying rulemaking, which remains inexplicably delayed at the CFPB. Elizabeth Fredrickson, a vice president at Wells Fargo Bank, told an audience at a breakout session that her compliance team began with a “keep or kill” exercise back in March for all of the CFPB rules. “We brought stakeholders together and talked about what we liked and what we did not like, what we need and what we could do,” she explained. “Really, our conversation about TRID revolved around the fact ...

Investors in nonprime MBS may be more vulnerable to fraudulent or defective mortgages compared to prime transactions because of deficiencies or inadequacies in the related representation-and-warranties frameworks, according to a new report from analysts at Moody’s Investors Service. “The collateral backing these transactions is riskier than the loans in post-crisis prime jumbo RMBS, which also generally use stronger frameworks,” the report said. For starters, “Transactions in the re-emerging non-prime RMBS sector are...

The Consumer Financial Protection Bureau’s integrated-disclosure rule has been in effect for more than 18 months now, and industry compliance professionals still have a number of questions in need of answers as they await the issuance of the so-called TRID 2.0 rule from the agency. The rule had been expected in the first quarter of 2017, but to date, not a peep has been uttered by the agency as to the cause of the delay or when lenders might expect the final rule. The Treasury Department recently issued...

The Treasury Department’s report on reforming financial regulation in the U.S. blames rules ushered in under the Dodd-Frank Act – and promulgated by the CFPB – for tight credit conditions in the mortgage market. “While Dodd-Frank and the ATR/QM [ability to repay/qualified mortgage] rule were not intended to eliminate markets for loans that did not meet the QM standards, the reality is that the vast majority of lenders remain unwilling to make loans that do not meet those standards, eliminating access to mortgages for many creditworthy borrowers,” Treasury wrote in the 142-page report. (At best, $3 billion to $4 billion in nonprime/non-QM mortgages might be originated this year out of total industrywide originations of $1.5 trillion.) The administration took aim at Appendix ...