A Look Ahead at What's In Store for the Mortgage Industry

Category: National Mortgage News
Published: Wednesday, 31 December 2014
Written by Admin

As the mortgage industry heads into the New Year, National Mortgage News is taking a look at the biggest trends and topics that will shape 2015.

Below is a roundup of links to the Outlook 2015 coverage. Check back on this page regularly to read more content as its published.

Origination Outlook: Expect More Consumer-Direct, Mini-C Activity

Secondary Outlook: 3% Down Payment Loans Help GSEs Control Market

Servicing Outlook: Regulatory Scrutiny Persists

Distressed Outlook: Big Banks Continue to Whittle Down Legacy Loans

Technology Outlook: Data, Data and More Data

Regulation Outlook: New Rules Ahead for Debt Collection, HMDA Data

Compliance Outlook: State Regulators to Keep a Close Watch on MSR Sales

Chicago FHLB Moves Closer to Rolling Out Conduits

Category: National Mortgage News
Published: Sunday, 28 December 2014
Written by Admin

The Federal Home Loan Bank of Chicago is moving closer to rolling out its mortgage conduit program for jumbo loans and a separate conduit for Ginnie Mae-eligible loans.

Both conduits are currently in a pilot mode, according to Chicago Home Loan Bank spokeswoman Melissa Warden. We are looking for a full roll-out at the end of the first quarter or early second quarter, she told National Mortgage News.  

The conduits represent an expansion of Chicagos Mortgage Partnership Finance program. Nine other Home Loan banks participate in the program, which the Chicago Home Loan Bank developed in the 1990s as a competitive alternative to Fannie Mae and Freddie Mac.

The Chicago Home Loan Bank has teamed up with Redwood Trust to provide this conduit for jumbos with loan balances of $417,000 to $729,750. It has dubbed the jumbo program MPF Direct.

The Chicago Home Loan Bank will purchase jumbo loans from member institutions and then sell them to Redwood, which will securitize them into the private-label securities market.

Redwood Trust Managing Director Mike McMahon said that roughly a dozen Illinois and Wisconsin community banks and credit unions are participating in the pilot program

We are in the process of buying loans and testing the process systems,” he said. “We will continue to work with the [Chicago bank] to identify additional sellers while we are in the pilot phase and we look forward to adding those sellers once we complete the pilot phase, he said.

Other Home Loan banks that that want to participate in the MPF Direct program must get Federal Housing Finance Agency approval.

Redwood Trust is a real estate investment trust based in Mill Valley, Calif., that buys and securitizes prime jumbo loans.

The Ginnie Mae conduit will allow Home Loan bank members to sell their Federal Housing Administration, Department of Veterans Affairs and Rural Housing Service guaranteed loans into Ginnie Mae pools. The Chicago Home Loan Bank will serve as the aggregator for this so-called Government Mortgage Partnership Finance program.

Servicing Outlook: Regulatory Scrutiny Persists

Category: National Mortgage News
Published: Saturday, 27 December 2014
Written by Admin

Regional banks and nonbank servicers are likely to find themselves in the crosshairs of the Consumer Financial Protection Bureau in the coming year as the agency continues its crackdown on mortgage servicers.

The CFPB wants to protect defaulted borrowers who received promises of relief from their servicer only to have that relief denied when a new servicer buys their loan. The agency has repeatedly warned servicers of problems with loan transfers, the integrity of consumer data and loss mitigation activities. It is said to have at least six active investigations into mortgage servicers, according to industry lawyers.

Regulators are taking a more rigorous look at servicing transfers, particularly on loss mitigation and loan modifications, said Lori Pinto, a senior vice president of business development at loan servicer Cenlar, based in Ewing, NJ

Nonbank or regional servicers have acquired massive amounts of defaulted loans in the last few years, mostly from large banks. Often there are missing documents or data errors in the transfer process, and loan modifications that simply do not get tracked.

The CFPBs new mortgage servicing rules that went into effect in January were meant to ensure that companies transferring servicing rights keep accurate records on borrowers and that transfers do not result in interruptions for consumers awaiting modifications.

Were seeing the bureau look at new servicers that may not have robust on-boarding of transferred loans, said Jeffrey Naimon, a partner at the Washington law firm BuckleySandler.

Regional banks may simply be the next in line, after large banks and nonbanks, to get hit with enforcement actions.

In September, Flagstar Bank was required to pay $37.5 million in restitution and fines for allegations by the CFPB that it blocked struggling borrowers from receiving foreclosure relief.

To this day, mortgage servicers are still bothered by a speech made earlier this year by Steven Antonakes, the CFPBs deputy director, in which he declared that business as usual has ended in mortgage servicing.

But the CFPB is not the only regulator focused on mortgage servicers. The New York State Department of Financial Services investigation of Ocwen Financial resulted in a $150 million settlement and the ouster of the servicers founder and executive chairman, William Erbey. Meanwhile, the regulator, led by banking superintendent Benjamin Lawsky, continues to investigate the operations of Nationstar Mortgage, another nonbank servicer.

And the settlement with New York regulators doesnt mean Ocwens troubles are over, as the firm faces numerous investigations by multiple agencies, including the Securities and Exchange Commission, and could likely become the latest poster child for bad servicing practices.

In addition, the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, wants ongoing monitoring of mortgage servicers. Even Ginnie Mae has warned that nonbank servicers, in particular, face capital constraints if the economy sours and they get hit with waves of defaults.

But there is some good news for large banks.

Bank of America, Citigroup, JPMorgan Chase and Wells Fargo, which were subject to the $25 billion national mortgage settlement, have improved their servicing operations after years of turmoil.

In the second quarter, none of the top banks failed any of the servicing tests conducted by Joseph A. Smith, the monitor of the national mortgage settlement. In the first quarter, B of A failed two tests and Citi failed just one.

Roelof Slump, a managing director at Fitch Ratings, wrote in a recent report that large bank servicers lack the integration challenges faced by nonbank servicers and have more meaningful regulatory compliance resources.

Community Law Center in Georgia Told to Cease Operations

Category: National Mortgage News
Published: Thursday, 25 December 2014
Written by Admin

Georgias Department of Banking and Finance has finalized a cease-and-desist order against Doraville, Ga.-based Community Legal Center LLC.

The department says it has evidence that Community Legal Center was brokering mortgages and originations without a license or proper exemption.

According to its web page, Community Legal Center offers a wide range of commercial and civil legal services, though it features assistance with real estate and commercial transactions under main areas of legal practice.

The cease-and-desist order applies only to any mortgage-related activities. Georgia allows attorneys licensed in the state to negotiate mortgage terms only if the negotiation is part of a separate legal case or matter that the attorney represents the client in, not as a primary service.

National Mortgage News sought Community Legal Centers comment by phone but the centers publicly listed number is not currently in service.