Tag Archives: Federal Reserve

Members of Congress linked arms with a broad coalition of community and professional associations to call for the reversal of a key provision in the Dodd-Frank Act, which critics charge will upend recovery in the housing markets, close the door on new homebuyers, and force borrowers to shoulder higher costs. The lawmakers and industry groups showed up in force at a press conference organized by the Coalition for Sensible Housing Policy, which plans to submit a white paper to authorities as official commentary.

The U.S. Census Bureau and HUD released data indicating southerly drifts for sales of new homes, revealing a 2.1 percent drop beneath the April rate of 326,000, 13.5 percent above the 281,000 estimates from May 2010.

The Commodity Futures Trading Commission has issued a six-month delay for the finalization of rules and regulations in sync with the Dodd-Frank Act, temporarily checking a host of new requirements that analysts fear will distress the derivatives, financial, and mortgage banking markets. The Federal Reserve, FDIC, and the Office of the Comptroller of Currency fell behind schedule in the lead-up to Dodd-Frank's implementation phase, which goes into effect on July 16 despite that over half of the required 387 provisions need writing.

More hard times may be in store for brokers in the loan origination sector, which the Federal Reserve's new compensation rules already shrank by causing a wholesale market pullback in April, according to Barclays Capital. A weekly economic forecast by the firm offered a section entitled "Bye, bye broker" that predicts a flight by brokers to high-balance loans over the next several years. The analysts note that the barred yield-spread premiums (YSP) provided brokers with as much as 90 percent of their compensation in the past.

Mortgage lenders across the country have reported layoffs and substantial downsizing, a consequence of heightened regulatory scrutiny, weak job growth, and brittle markets slumbering in the wake of diminishing consumer confidence. Despite a small spurt in refinancing measures and a drop in lending rates to their lowest ebb since the turn of the century, origination loan volume remains low, and lenders are coming to terms with the fact that they will be financing fewer mortgages over a longer-than-expected period.

The Federal Reserve is raising the dollar amount of mortgage fees that triggers additional disclosure requirements under the Truth in Lending Act (TILA) and the Home Ownership and Equity Protection Act (HOEPA). On Monday, the central bank's board of governors published its annual adjustment to the rule, bumping the amount of the fee-based trigger up 3 percent to $611, effective January 1, 2012. Currently that threshold is set at $592.

The top three U.S. banking regulators have issued guidelines that would require comprehensive stress tests every year for lending institutions with assets totaling $10 billion or more. The Federal Reserve, FDIC, and Office of the Comptroller of the Currency proposed guidance material that would test a bank's capital preparedness and lending ability under national economic duress. The evaluation would also appraise the integrity of the banks' payout plans for shareholders.

The Federal Reserve released a report on Wednesday that suggests a "steady pace" of economic growth throughout most of the country, with intermittent spots of economic activity slowing in four of its 12 regional districts, namely Philadelphia, New York, Atlanta, and Chicago. The central bank's regularly published Beige Book indicated that construction and real estate markets continued to show widespread weakness. No district seemed to see an increase in home prices.

The nation's largest association for mortgage bankers has issued a statement praising a last-minute extension of the comment deadline for Dodd-Frank's controversial risk-retention rule and its Qualified Residential Mortgage (QRM), which opponents charge will make loans more expensive for homebuyers. The Mortgage Bankers Association says the rule will have a "profound long-term effect" on the mortgage financing industry, which is good reason to give stakeholders more time to understand its full scope.

Lender reaction at the recent 47th annual Chicago Federal Reserve Conference was largely negative on the current proposal to alter the selection process for members of the Federal Reserve Open Market Committee. The new system would allow Congress to choose members of the committee instead of continuing to use regional Fed officials selected by the private sector to determine committee membership. The bill introduced last week, is viewed as an attempt to move power away from the regional Fed system and the private sector.