Tag Archives: Regulation

Richard Koch, SVP at Morningstar Credit Ratings, sat down with Mortgage Markets Today to discuss how regulations issued by the CFPB will impact servicers in 2014.

The new year will bring some clarity to the housing market and likely some loosening of credit, though an air of mystery does still surround some aspects of the industry, according to FBR's outlook for 2014. With Mel Watt, a former Democratic senator from North Carolina, taking the helm at the Federal Housing Finance Agency (FHFA) and three openings at the Federal Reserve, some uncertainty persists despite some clarity surrounding Qualified Mortgages (QM) and other regulations in the housing industry.

Mortgage industry commentators may argue (and they certainly have) about the Consumer Financial Protection Bureau's (CFPB) performance over the last year, but one thing is certain: The bureau knows how to command headlines. Early this year, CFPB finally issued its long awaited Qualified Mortgage (QM) guidelines along with a slew of other finance regulations. With the future of housing finance on the line, it's no wonder readers of theMReport.com couldn't tear themselves away from the news.

The National Association of Realtors (NAR) calculated an adjusted annualized sales rate of 4.90 million for existing homes last month, representing a drop from 5.12 million in October and 4.96 million in November 2012. According to the group, it was the first time in 29 months that sales fell below year-ago levels. Singling out single-family home sales, transactions were at an adjusted pace of 4.32 million, down 3.8 percent month-over-month and 0.9 percent year-over-year.

HUD has issued a newly revised definition of a qualified mortgage (QM) that will affect all Federal Housing Administration (FHA)-insured loans moving forward. The new rules go into effect on January 10, 2014, and will apply to mortgages that are insured, guaranteed, or administered by HUD. The agency defined two categories of QM, with the main difference being the relation between a loan's annual percentage rate and its average prime offer rate.

The Consumer Financial Protection Bureau issued on Wednesday a rule requiring lenders to use its new mortgage disclosure templates designed to streamline and simplify information for consumers. The forms will replace the standard disclosures given at the opening and closing stages of a loan. Testing the new templates against the old, the CFPB found borrowers using the updated forms showed a better understanding of their loan, demonstrating a 29 percent improvement in comprehension.

Republic Mortgage Insurance Corporation faces a $100,000 fine and enhanced supervision by the Consumer Financial Protection Bureau for allegedly offering illegal kickbacks to lenders in return for business referrals, according to an announcement from CFPB. "The CFPB believes that RMIC provided kickbacks to mortgage lenders by purchasing captive reinsurance that was essentially worthless but was designed to make a profit for the lenders," the bureau said in its announcement.

With the implementation date for the ability-to-repay and qualified mortgage (QM) guidelines creeping ever close, Fitch Ratings expects it will have to adapt its ratings process to work them in.

When it comes to next year's regulatory obstacles, CEOs and senior executives from the mortgage industry's biggest players agree on one thing: Education will be key to keeping business going. In a panel at the 2013 Realtors Conference and Expo, high-level names from Quicken Loans, Wells Fargo Home Mortgage, JPMorgan Chase, and Bank of America discussed the qualified mortgage (QM) guidelines. While the initial implementation of these rules is expected to restrict lending in the short-term, panelists agreed that business should even out.

The Consumer Financial Protection Bureau announced it has issued a proposed consent order in its enforcement action against Castle & Cooke Mortgage, LLC. Under the terms of the order, Castle & Cooke has agreed to pay more than $9.2 million in restitution to consumers and $4 million in civil penalties to settle allegations that two of its officers--president Matthew Pineda and SVP of capital markets Buck Hawkins--paid illegal bonuses to loan officers based on the interest rates of loans offered to borrowers.