 | | | | By Brandon Ivey bivey@imfpubs.com The Securities and Exchange Commission Wednesday approved a final rule on registration and disclosures for asset-backed securities, including new non-agency MBS. The new rule, commonly known in the industry as “Reg AB2,” requires loan-level disclosures and a three-day waiting period before issuance. The SEC believes Reg AB2 will improve protections for investors. The three-day waiting period before issuance is aimed at making MBS issuance more like initial public offerings of stock where investors have time to analyze an offering before making an investment decision. However, issuers won a slight concession on the matter: the SEC had initially proposed a five-day waiting period. The final rule also imposes more stringent standards on issuers, replacing a rating requirement for some deals with new requirements for provisions in certain securities. Among the new requirements are standards for reviews of breaches of representations and warranties prompted by delinquencies along with a vote from investors. Loan-level disclosures on new securities will be made through the SEC’s Electronic Data Gathering, Analysis, and Retrieval system, known as EDGAR. The SEC had previously proposed that issuers disclose loan-level data on their own websites. The proposal was met with strong resistance from issuers. The SEC also worked with the Consumer Financial Protection Bureau to address privacy concerns regarding required loan-level disclosures. Other areas of interest: Originations, Secondary/MBS, Regulatory, Nonconforming | | By Paul Muolo pmuolo@imfpubs.com Ginnie Mae still controls roughly $5.7 billion of mortgage servicing rights tied to the now-defunct Taylor, Bean & Whitaker and plans to finally unload the product next year. In an interview with IMFnews, Ginnie Mae President Ted Tozer said at one point the portfolio was as large as $26.2 billion. TBW, a Florida-based nonbank, failed in 2009 after it came to light that company executives were engaged in a massive fraud scheme to create fictitious mortgage collateral. Tozer said that in July of this year the agency transferred the subservicing contract on the TBW product from Bank of America to Carrington Mortgage and Selene Finance. “BofA did a poor servicing job for us,” Tozer said. That “poor servicing job” was one reason why Ginnie was entitled to $200 million in damages as part of BofA’s recent “global” MBS settlement with the Department of Justice. For more on the story, see the Friday edition of Inside FHA Lending. Other areas of interest: Servicing, Mergers & Acquisitions, Ginnie Mae/FHA | | By Paul Muolo pmuolo@imfpubs.com Flagstar Bancorp, the parent of the nation’s 17th largest residential servicer, disclosed in a new regulatory filing that the company is in talks with the Consumer Financial Protection Bureau over alleged violations of federal law arising from the bank’s loss mitigation practices and default servicing dating back to 2011. Flagstar Bank FSB, which owns roughly $69 billion in mortgage servicing rights, said it has already provided the CFPB with documents and “other information” regarding the matter in response to a civil investigative demand (CID). “While the bank intends to vigorously defend against any enforcement action that may be brought, it has commenced discussions with the CFPB staff to determine if a settlement can be achieved.” It added: “Those discussions are ongoing.” At press time, no other information was available on the matter. A company spokeswoman declined to comment. Flagstar filed a document 8-K with the Securities and Exchange Commission before the market opened Wednesday morning. In trading during the day, its share price was down 4 percent. Other areas of interest: Servicing, Regulatory | | By Charles Wisniowski cwisniowski@imfpubs.com Mortgage insurance company “eligibility” rules promulgated by the Federal Housing Finance Agency represent a “thoughtful effort” but “modest changes” are required, according to a new white paper on the topic penned by analysts at Moody’s and the Urban Institute. Moody’s Analytics’ Mark Zandi and Chris deRitis and the Urban Institute’s Jim Parrott believe the FHFA’s eligibility requirements “should succeed” in ensuring that private MI firms are strong counterparties to Fannie Mae and Freddie Mac, while serving as a “much improved bulwark against excessive risk” in the system. In early July, the FHFA unveiled the new eligibility standards, which propose – for the first time – risk-based capital rules that are tied to a measurement of so called “available assets.” Among other things, the FHFA will not allow an MI to count as an available asset a subsidiary company that is not traded on a public exchange. Also, MI firms must have $400 million in capital, and $500 million if the company is a start-up mortgage insurer. “Several features of the rules as currently written, however, would likely unnecessarily increase costs and cyclicality in the mortgage and housing markets,” the trio write. The economists add that with some “modest changes,” the negative effects can be reduced significantly. The FHFA is accepting public commentary on the proposed rules through Sept. 8. Other areas of interest: Originations, Regulatory, Fannie, Freddie, GSEs | | By Thomas Ressler tressler@imfpubs.com Officials from the Consumer Financial Protection Bureau jumped into the mortgage compliance weeds during a webinar this week to answer industry questions about its TILA/RESPA Integrated Disclosure rule, otherwise known as “TRID,” which takes effect in August 2015. Among the questions related to disclosure and re-disclosure timing, some industry reps asked whether the seven-day waiting period before consummation that applies to loan estimates also applies to the revised disclosures. “No, the seven-day waiting period is a Truth in Lending Act statutory waiting period that applies today to the initial TILA disclosures, and after August of next year, to the loan estimate provided after application, and does not apply to the revised disclosures,” said Andy Arculin, counsel in the CFPB’s Office of Regulations. Some lender reps asked if creditors are required to provide revised loan estimates on the same business day that a consumer or loan officer requests a rate lock. “Not necessarily,” Arculin said. “In the bureau’s view, the revised disclosure must be provided on the business day on which the rate lock agreement between the creditor and the consumer is entered into, not necessarily the date that a rate lock is requested.” Other questions had to do with application, scope, record retention, tolerances and basic form contents. The seminar this week was the second in a series from the bureau on the TRID, with sponsorship from the Federal Reserve. For detailed coverage, see the next issue of Inside the CFPB. Other areas of interest: Originations, Regulatory | | By Paul Muolo pmuolo@imfpubs.com According to new figures that will appear later this week in Inside FHA Lending, an affiliate publication, Quicken Loans not only continues to grow its FHA volume nicely, but has the lowest average loan-to-value ratio among the top 30 lenders in the sector. Its average LTV during the first six months of the year was 86.9 percent on a volume of $3.14 billion. FHA loans originated by market leader Wells Fargo had an average LTV of 93.6 percent. The figures exclude reverse mortgages and modified loans… In the past we’ve reported on how the share price of Ocwen Financial has been clobbered since the “Lawsky” crisis of early 2014. But what about the share price of some of the other Ocwen-related spin-offs? On Wednesday, shares of Altisource Asset Management Corp. were selling for $697 compared to a 52-week high of $1,209. Its low is $310. Then again, the stock is closely held and thinly traded. There are three publicly traded companies that carry the Altisource name… Ever wonder exactly how many seller/servicers Fannie Mae serves? According to new servicing commentary on its website, the GSE counts roughly 1,100 lenders as its customers… VENDOR NEWS: Nationwide Title Clearing said it is now “greener than ever.” The company on Wednesday issued a statement, saying it has reached a new milestone: 60 percent of its documents are now being “eRecorded.” Roughly 1,100 counties in the U.S. accept eRecording, with about 15 new counties jumping on the bandwagon weekly. In just under two years, NTC has seen its eRecording numbers jump from 10 to 60 percent. MORTGAGE PEOPLE: BB&T Corp., a top 15 lender/servicer, has named Ricky Brown as its new president. Brown succeeds the retiring Rob Greene, who had been president since the BB&T merger of equals with Southern National in 1995. Brown was named to BB&T’s executive team in 2004. Auction.com promoted Mindy Heppberger to executive vice president and chief legal officer. She joined Auction.com in 2013 from Yahoo!
If You Want the Option to Sell Your Loans Later, QRM Matters While the qualified residential mortgage standard does not apply directly to originators, its implications will be felt by anyone who sells their originations into securities—or thinks they might sell those loans into securities at some future time. Learn more about the proposed standards and their effect on the mortgage market in IMF’s Guide to Qualified Residential Mortgages and Risk Retention. Other areas of interest: Originations, Servicing, Personnel, Data/Rankings, Ginnie Mae/FHA, Technology | | | |
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