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MBA Sees Originations Increasing 7% in 2015
Mortgage Action Alliance Newsletter
Congress left town last week, having passed a Continuing Resolution to keep the federal government funded into December, and will return for a lame-duck session one week after the November midterm elections. Before adjourning, the House passed a package of Dodd-Frank fixes that included MBA-supported changes to the Ability to Repay rule and its calculation of “points and fees.”Also last week, MBA President and CEO David H. Stevens was joined by MBA’s Chairman-Elect Bill Cosgrove, CMB and Vice Chairman Bill Emerson, as well as other industry leaders, at a meeting with senior Obama administration officials and executives from Fannie Mae and Freddie Mac to discuss ways to expand access to mortgage credit.
Key MBA Actions
House Passes Package of Dodd-Frank Fixes, Including ATR “Points and Fees
”This past Tuesday, the House of Representatives passed H.R. 5461, a package of four bills aiming to amend the Dodd-Frank Act. The legislation, which passed by a vote of 327 to 97, combined four separate bills that had previously passed either the House or Senate in an overwhelming fashion. One of the included bills was H.R. 3211, the Mortgage Choice Act, which would fix the way “points and fees” are calculated under the CFPB’s Ability to Repay (ATR) rule, to ensure more loans receive the legal protections afforded to Qualified Mortgages. MBA worked with its member companies and sister trades to send a letter to House members, which helped to advance this legislation to the House floor and ensured its passage. Members of the Mortgage Action Alliance (MAA) also weighed in strongly by contacting their Representatives in support of the bill. H.R. 5461 now moves to the Senate for further consideration. MBA and MAA will continue to push for a vote on this legislation when Congress returns after the November midterm elections.
MBA and Industry Trade Groups Urge CFPB to Provide Authoritative Guidance on RESPA–TILA Implementation; CFPB also Set to Host New Informational Webinar
MBA and more than one dozen industry groups submitted a letter last week asking the CFPB to increase its outreach efforts ahead of implementation of the RESPA–TILA Integrated Disclosure rule on August 1, 2015. The letter, while recognizing the efforts the Bureau has made through webinars and other channels, echoed previous MBA sentiment that, due to the complexity of this and other rules, the Bureau should provide reliable, written guidance developed with input from stakeholders on outstanding issues. The letter also asked that the CFPB continue its participation in industry conferences and forums related to the implementation of the rule, provide more exemplar forms for a variety of transactions, work with vendors to ensure they are ready for the August 1 deadline, and that the Bureau review duplicative and contradictory state laws which threaten to add complexity to the implementation of the integrated disclosures. Relatedly, the CFPB will be holding a new webinar on Wednesday, October 1 from 2:00–3:30 PM Eastern to address the rule’s loan estimate form, with a focus on questions raised by technology vendors. To participate you will need to be registered. In advance of the webinar, MBA will be collecting, compiling, and providing to the CFPB outstanding questions on the integrated disclosures.
MBA Submits Comments on FHFA Strategic Plan
Last Monday, MBA submitted comments on the single-family and multifamily components of FHFA’s Strategic Plan for Fiscal Years 2015-19. On the single-family side, MBA urged FHFA to focus on policies that expanded borrowers’ access to credit. Noting that many first-time homebuyers and low-to-moderate income borrowers are being priced out of the market, MBA identified several specific priorities that would help accomplish this goal: implementation of MBA’s deeper, up-front risk-sharing proposal; moving the GSEs to issue a common, fungible, TBA-eligible single security to improve liquidity; and revision of the rep and warrant framework to provide lenders with needed clarity. MBA also strongly argued that the recently proposed Federal Home Loan Bank (FHLB) membership limitations be abandoned because they would significantly undermine the FHLB system, causing further harm to the housing market. On the multifamily side, MBA urged FHFA to underscore the importance of multifamily rental housing and the GSEs’ role in providing liquidity and stability, as well as to consider additional strategic steps to continue strengthening the market.
FHFA OIG Issues Report on Rep and Warrant Framework; MBA Preparing Response to Report’s Conclusions
In additional FHFA news, the Agency’s Office of the Inspector General (OIG) issued a report last week critical of FHFA’s recent efforts to clarify the GSEs’ rep and warrant framework. The report argued that the GSE quality control systems are insufficiently prepared for the changes that were announced, and that as a result the GSEs will assume greater risk than under the current framework. MBA believes that the OIG’s conclusions are mistaken and is preparing a formal response to the report. MBA has committed to leading the effort with FHFA and the GSEs to provide lenders with needed clarity and key reforms of the rep and warrant framework, to help FHFA fulfill its statutory mission of facilitating a liquid, stable, resilient national housing market. Expanding the credit box is critical to making the housing recovery a sustainable one, and the lack of clarity on lenders’ rep and warrant liability is directly responsible for the credit overlays that are preventing many borrowers from obtaining a mortgage.
FHA Releases Draft Loan Quality Assessment Methodology
FHA posted a draft of its Loan Quality Assessment Methodology for feedback. This Methodology is one part of FHA’s Blueprint for Access strategy announced earlier this year, which aims to expand access to mortgage credit for underserved borrowers. Generally, the Methodology is based on three core concepts: identifying a loan defect; capturing the sources and causes of the defect; and assessing the severity level of the defect. MBA has been working closely with FHA for the past year to design processes to improve transparency and consistency in FHA’s loan quality assessments and will continue to do so with regard to this Methodology.
Free Webinar — TILA/RESPA Rule
The CFPB has informed us that the Federal Reserve will be hosting a 90 minute webinar to answer frequently asked questions about the TILA-RESPA Integrated Disclosure rule on Wednesday, October 1 at 2:00pm EDT. This will be the third in a series of webinars that have been held to address the new rule as interested stakeholders work to implement it over the next year. In this session, they will specifically address the loan estimate form with a focus on questions raised by technology vendors.
To register for the webinar, please click here: http://www.philadelphiafed.org/bank-resources/publications/consumer-compliance-outlook/outlook-live
Mortgage Action Alliance Newsletter
Key MBA Action
TRIA Reauthorization Bill Passes in Senate Last Thursday the Senate, by a vote of 93-4, passed S. 2244, The Terrorism Risk Insurance (TRIA) Reauthorization Act of 2014. If enacted, S. 2244 would reauthorize TRIA for seven years while making modest reforms to the existing program. Earlier in the week, MBA President and CEO David H. Stevens sent a letter of support for S. 2244 to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) and issued a statement following the Senate vote. The TRIA reauthorization process now moves to the House of Representatives, where the Republican leadership is currently attempting to garner support for a competing TRIA reauthorization proposal, authored by Financial Services Committee Chairman Jeb Hansarling (R-TX).
MBA Pushes Back on FHFA OIG Report that Questions Recent GSE Purchase Mix FHFA’s Office of the Inspector General (OIG) released a report last week indicating that GSE purchases of mortgages from their largest counterparties have declined significantly since 2011, and that smaller lenders have considerably increased direct sales to the GSEs. MBA believes this is a positive development, which the Association has supported with policy positions that call for fair and competitive markets for lenders of all sizes and business models (e.g., guarantee fees based on loan quality, not volume or asset size).
Unfortunately, the OIG report inexplicably concludes that the shift to “smaller and nonbank lenders” may increase the GSEs’ exposure to counterparty risk and raised costs for managing this risk. The report’s narrative ignores the significant risks that the GSEs took through their aggregation models, and the OIG’s “findings” defy basic principles of risk management — that diversification of business partners lowers the GSEs’ and the taxpayer’s risk, period. Taxpayers, the GSEs and most of all, consumers, benefit from a strong, diversified market where lenders of all sizes and business models can constructively and fairly participate. MBA will be preparing a detailed rebuttal to the OIG report to set the record straight on the important benefits that a more competitive and diversified seller base has had on the GSEs.
MBA Files Comment Letter on FHA’s HAWK Program, Suggests Changes to Further Help Borrowers Last Monday, MBA filed a comment letter with FHA on the Homeowners Armed with Knowledge (HAWK) housing counseling program, which would provide first-time homebuyers who receive HUD-certified counseling with FHA mortgage insurance premium (MIP) reductions. MBA believes that the current FHA premium structure is pricing many otherwise qualified borrowers out of the market, and in its comments MBA congratulated FHA for its initiative with HAWK, but suggested that the program be restructured to offer borrowers greater material reductions in their monthly payments by shifting proposed reductions in the upfront MIP to the annual MIP. On a $200,000 loan — assuming a four percent base note rate, 30-year term, financing of the upfront MIP, and that the borrower completes all counseling and makes all payments within program guidelines — MBA’s alternative proposal would save a borrower $15,369 over the full 30-year life of the loan as compared to savings of $12,834 over the same time period under FHA’s HAWK proposal. MBA’s comment also expressed concern with several other aspects of the FHA proposal, including its requiring of lenders to bear the cost of some portions of the counseling, the utility of post-closing counseling, and the limiting of the initial phase of the HAWK program to lenders and servicers selected by FHA.
MBA Submits Letter to CFPB, Offers Thoughts on Proposed Changes to Annual Privacy Notice Requirement MBA submitted a comment letter to the CFPB last Monday, regarding its proposed amendments to the annual privacy notice requirement under the Gramm-Leach-Bliley Act. In the letter, MBA strongly supported the CFPB’s efforts to reduce the burden and costs to the industry associated with providing annual privacy notices, while recognizing the importance of clearly disclosing to consumers a financial institution’s policies for the treatment and sharing of nonpublic information. While supportive, the letter also expressed concern that the ability to post a privacy policy online in certain circumstances — rather than send annual notices — will not be as widely available as it should be. MBA then went on to suggest that any notice that complies with Regulation P should be qualified to use the proposed amendment’s alternate delivery method if the financial institution is otherwise eligible.
CFPB Proposes Expanding Complaint Database to Include Consumer Narratives The CFPB is seeking comments on a proposed policy statement that would add “unstructured” consumer complaint narratives to the CFPB’s publicly available consumer complaint database concerning consumer financial products and services. According to the Bureau, only the narratives for which they have obtained consumer consent, which have then additionally been scrubbed to remove personally identifiable consumer information, would be posted. In addition, under the proposal, lenders would be free to post public responses to consumer complaint narratives as long as they did not contain personally identifying information. MBA has consistently and strongly opposed efforts by CFPB to release unverified information of this type, as it would be costly to the market and consumers alike. Comments on the proposed policy are due 30 days from the date of publication in the Federal Register, and MBA intends to provide an official comment.
FHA Gives Final Extension on Recertification Filing Deadline In response to issues many lenders have experienced completing the annual recertification process through the Lender Electronic Assessment Portal (LEAP), FHA has provided a final extension of the recertification filing deadline for Title I and Title II lenders and mortgagees with the following fiscal year end dates: December 31, 2013; January 31, 2014; February 28, 2014; and March 31, 2014. The deadline to submit complete recertification packages for this group, including the submission of financial information and annual renewal fees, will now be July 31, 2014.
MBA Compliance Essentials is on the Road with its TILA-RESPA Integration Forums This summer, MBA is coming to a city near you with its traveling TILA-RESPA Integration Forums. These Compliance Essentials Forums provide a day-long deep dive into all of the major implementation issues that companies need to be working on one year prior to implementation. Forum speakers include top-level legal, compliance and technology experts — including a CFPB representative. Upcoming opportunities include next week’s stop in Los Angeles on Wednesday, July 23rd; Atlanta on Thursday, July 31st; and Washington, DC on Thursday, August 7th. MBA Member registration starts as low as $500 a person, depending on the date of purchase.
Mortgage Choice Act Passes
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Economist Elliot Eisenberg on GDP Growth
While expecting Q1 GDP growth to be revised down to an annualized rate of -2% from the current -1%, expect the Fed to keep tapering on autopilot and reduce it by another $10 billion to $35 billion/month at the conclusion of the June 17-18 meeting. Markets will now be laser-focused on how and more importantly when the Federal Reserve plans to engineer the first increase in short-term rates since 7/06.
Elliot F. Eisenberg, Ph.D.
GraphsandLaughs, LLC
Cell: 202.306.2731
Call to Action — Support Mortgage Choice Act
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Q1 2014 AZ State Data Report
Attached please find MBA’s Q1 2014 state data report for Arizona
Mortgage Alliance Newsletter
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Arizona Represented at National Advocacy Conference
Just a quick update on the Advocacy efforts of our Arizona Mortgage Professionals whose involvement and dedication make a difference to all of us….
AMLA’s 2014 President, Kelly Powers, attended both the State and Local MBA Annual Conference and the National Advocacy Conference in Washington, and spent April 10th day on Capitol Hill meeting with members of the House and Senate. There were a total of nine participants representing Arizona on the Hill, including Piero Aviles, Ashley Kendrick, Rich Flanagan, PJ Harrigan, Jamie Korus, Julie Messina, Cody Pearce, and Amy Swaney.The hot topic was of course, GSE reform and specifically the elements of the Johnson-Crapo Bill and HR 2767, otherwise known as the PATH Act. The Arizona delegation spent time with our Legislators and their staff discussing the many issues facing the industry today, in particular the need to maintain access to credit.
Jamie Korus, AMLA member, was among 15 people representing all segments of the lending community that attended the following meetings: Mel Watts, Director of the FHFA at the FHFA, Senate Banking Committee (Johnson and Crapo staff), Senator Bob Corker (R-TN), Richard Cordray, Director of the CFPB at the CFPB, Obama’s Administration in the West Wing of the White House. The issues they addressed were diverse; they included GSE reform; the Johnson-Crapo Bill; compensatory fees; GSE Representation and Warranties; GSE loan limits; ATR/QM Rule clarity; cures and expansion of credit; supporting FHA’s mission to provide credit to underserved markets; and QRM alignment with QM. Jamie’s comments follow:
“The experience as a whole was exceptional. The opportunity to speak directly with policy makers and regulators was unmatched by any other advocacy event I have previously attended. It was also very reassuring to see the warm reception given and obvious relationship that the MBA staff has with all of the people that we met with. It allowed me to see first-hand exactly how well the MBA lobbies and advocates on behalf of all of us, our industry and the consumer.”
Amy Swaney, Mortgage Acton Alliance Chair, presented at at the National Advocacy Conference Town Hall Meeting on April 9 in Washington DC. There were over 400 in attendance representing 39 States. Amy stressed the need for all of us to become involved in order to make our voices heard and our challenges addressed. She cited the sobering statistic that the National Association of Realtors had over 4000 people participate in their day on the Hill while we had less than 275 represent the Mortgage Industry. There were eleven States that did not even attend the conference, nor have they ever! As an FYI, Arizona has 504 registered Mortgage Action Alliance Members, representing 48 member firms that employee 1315 people. Moral of the story- GET INVOLVED!!! Your career depends on it!
As always, AMLA encourages participation among all of our members on both the local and Federal level. Please contact Kelly Powers at 602-332-3282 if you are interested in taking on this rewarding challenge .