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Inside Mortgage Finance

October 25, 2012

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Industry Future Hasn’t Come Into Focus Over The Past Year, But Lenders Sense Turning Point

Regulatory uncertainty continues to frustrate mortgage bankers who can see the outlines of major pending changes in consumer protection, securitization rules and capital requirements that remain largely enshrouded in bureaucratic fog. “We have these new concepts, qualified mortgages and qualified residential mortgages, but we don’t know what their exact definitions are,” said Michael Heid, president of Wells Fargo Home Mortgage, during a panel session at this week’s annual convention of the Mortgage Bankers Association in Chicago. “We are in a gray state; the concepts are there, but the rules aren’t. At the same time we’re having to clean up issues from the past.” Debra Still, president and CEO of Pulte Mortgage, said... Read More

GSEs Plod Along Toward Uncertain Future; Ginnie Presses to Upgrade

Fannie Mae, Freddie Mac and Ginnie Mae officials pledged to continue efforts to build a better secondary market system while coping with the business challenges of dealing with an increasingly diverse universe of lenders delivering loans directly to the agencies. “Fannie Mae is a different company today,” said Timothy Mayopoulos, president and CEO of the firm, during a panel session at this week’s annual convention of the Mortgage Bankers Association. He said 80 percent of the government-sponsored enterprise’s upper management has been promoted to their roles or hired since the GSE went into conservatorship four years ago. Half of the company’s 7,000 employees have been hired since then. “The people of Fannie Mae today are... Read More

CFPB Eyeing QM Rule With Safe Harbor for Prime Mortgages, Rebuttable Presumption for Subprime

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... Read More

Industry Slams Proposed Basel III Capital Rules for ‘Ignoring’ Private MI, Calls for Recognition of Product’s Role in Housing

The Mortgage Insurance Companies of America urged U.S. banking regulators not to exclude private mortgage insurance as they consider the proposed Basel III risk-based capital framework for the nation’s banks. Commenting on the proposed rules this week, MICA urged regulators to acknowledge the crucial role private mortgage insurance plays in the single-family residential market and recognize it in the proposed capital rules “with a reduced capital charge.” “Exclusion of private mortgage insurance in the proposed rules is a departure from accepted banking practices and would have ‘unintended adverse consequences on housing finance and the broader U.S. economy,’” said Suzanne Hutchinson, MICA executive vice president. Under the proposed U.S. implementation of Basel III, conventional residential mortgages with loan-to-value ratios in excess of 80 percent, regardless of the presence of private mortgage insurance, could trigger... Read More

Congress May Approve Legislation to Improve HARP After November Elections

Congress will act on a bipartisan basis after the November elections to approve legislative changes to the Home Affordable Refinance Program, a well-connected industry participant predicted, although some Republicans in Congress remain opposed to a bill crafted by Senate Democrats Robert Menendez, NJ, and Barbara Boxer, CA. Lewis Ranieri, chairman and founding partner of Ranieri Partners, said this week that he fully expects Congress to approve S. 3522, the “Responsible Homeowner Refinancing Act,” after the upcoming elections. He suggested that Republicans have been unwilling to pass the bill due to fears that approving an Obama administration proposal could hurt their re-election efforts. Ranieri made... Read More

FHFA IG Says GSEs Should Push Servicers to Pursue More Deficiency Recoveries, Agency to Develop Guidance

The Federal Housing Finance Agency’s internal watchdog said Fannie Mae and Freddie Mac could mitigate more losses if they recover mortgage deficiencies from borrowers more efficiently. An FHFA Office of Inspector General report found weaknesses in the ability of the government-sponsored enterprises to collect shortfalls from borrowers from post-foreclosure sales. In 2011, the GSEs recovered only a small fraction of the deficiencies they pursued, an estimated $4.7 million collected out of $2.1 billion pursued, the IG reported. The IG blames this on the FHFA’s lack of guidance and oversight of the GSEs’ deficiency recovery efforts. While the FHFA has an opportunity to provide... Read More

U.S. Attorney Uses False Claims Act to Sue BofA Over Allegedly Fraudulent Loans Sold to GSEs

The U.S. Attorney for the Southern District of New York opened a new battlefront in intense warfare over losses taken by investors and others in the collapse of the housing market. The government this week filed charges against Bank of America, as the party left liable for activities at Countrywide Home Loans, based on the False Claims Act, a federal law that provides for hefty treble damages and penalties. The FCA has been used in recent mortgage-related charges involving FHA loans, but the new filing attempts to expand the law to loans sold to Fannie Mae and Freddie Mac. In its filing, the government contends... Read More

Experts: New Fannie, Freddie Rep & Warranty Framework A Positive Step But Its Effectiveness Remains Uncertain

Recent efforts by the government-sponsored enterprises and the Federal Housing Finance Agency to offer clarity and consistency about repurchase demands may or may not bear fruit as neither agency officials nor industry observers can speak confidently as to its ultimate effectiveness. According to participants at an Inside Mortgage Finance webinar this week, the GSE representation and warranty framework unveiled by the FHFA last month and the GSEs’ new quality control guidelines announced last week are steps in the right direction but there are a lot of moving parts to take into account. “We tried the best we could to address... Read More

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