Bill Passes House to Expand Mortgage Availability
By a vote of 255-174, the House approved the “Portfolio Lending and Mortgage Access Act,” which would broaden the definition of qualified mortgages – those that qualify for the safe harbor – to include all mortgages held on a lender’s balance sheet. The new QM rule would recognize all residential mortgage loans held in portfolio by credit unions and other lenders as qualified mortgages for the purposes of the Consumer Financial Protection Bureau’s mortgage lending rules. But the Portfolio Lending and Mortgage Access Act would change those rules, but despite passing by a comfortable margin in the House, the likelihood of the Portfolio Lending and Mortgage Access Act being enacted as a law is slim, due to the threat of veto from the White House. if the President were presented with H.R. 1210, his senior advisors would recommend that he veto the bill.” “The Independent Community Bankers Association reports that 73% of community bankers have decreased their mortgage business or completely stopped providing mortgage loans due to the expense of complying with this regulatory burden,” Hensarling said in a statement. “One-out-of-five Americans who borrowed to buy a home just five years ago will not meet the underwriting requirements of the CFPB’s mortgage rules. According to the Federal Reserve, that will hit roughly one-third of Hispanic and African-American borrowers,” Hensarling continued. “This common sense legislation recognizes that the most effective way to ensure that a borrower has the ability to repay is not a one-size-fits-all, top-down regulation from Washington that mandates the terms of loans and underwriting practices.”
Potential Higher Conforming Loan Amount in the Near Future
Using the proposed ‘expanded-data’ FHFA house price index, year-over-year appreciation from the third quarter of 2014 to the third quarter of this year of approximately 2% would have been sufficient to surpass the price level used to set the current loan limit of $417,000. We estimate that the index will likely report a 5.5% increase year-over-year in the third quarter. Based on the HERA mandated formula, the conforming loan limit will increase almost 3% to a new overall limit of $429,000.
G Fees Update
The House and Senate will be working to reconcile the differences between the highway reauthorization bills passed by each legislative branch. This will pave the way for votes on a final agreement that will go to President Obama for his signature. Recently, the House passed the Neugebauer-Huizenga amendment, which will remove an increase in Fannie Mae and Freddie Mac’s Guarantee fee (g-fees) and a cut in Federal Reserve stock dividends as sources of funding for the bill. The highway bill that the Senate passed still contains these provisions.
The extension of the increase in g-fees would be harmful to the real estate finance system. G-fees are a critical risk management tool used by Fannie Mae and Freddie Mac to protect against losses from faulty loans. Increasing g-fees for non-related purposes effectively taxes potential homebuyers and consumers looking to refinance their mortgages. This increase, first enacted in 2011, has harmed homeowners, continues to do so every day, and should not be extended to fund unrelated federal spending. By using the housing GSEs as a piggybank to fund unrelated government programs puts the housing market recovery in jeopardy.
The Office of the Comptroller of the Currency has informed residential lenders that it will soon start examining banks for their compliance with the Truth in Lending Act and Real Estate Settlement Procedures Act Integrated Disclosure rule, commonly known as TRID. Examiners expect banks to make good faith efforts to comply with the rule’s requirements in a timely manner. Specifically, examiners are considering the bank’s implementation plan, including actions taken to update policies, procedures, and processes, as well as training of appropriate staff and handling of early technical problems or other implementation challenges.
Potential Email Communication and Compliance Issues
At least 2 states, Massachusetts and New York, want to see the emails between lenders/brokers and borrowers. The New York regulator, speaking at the NY conference this week, said they expect to see either printed copies of the substantive emails or a PDF of them in the file. If they contact the borrower and there are emails that you don’t have, you are likely in trouble. Also, they warned that using personal web sites and emails such as Yahoo and Gmail are likely to net a violation. New York expects lenders/brokers to have full monitoring of employees’ activities.
CFPB Complaint Database Full of Errors
According to a recent article in National Mortgage News, the CFPB complaint database is so riddled with bad information CFPB employees don’t even trust it. NMN quotes a former senior official saying, “When we were asked to look into a complaint, more than 25% of the time it turned out that the data we were looking at didn’t really pan out or it was just incorrect in the way it was reported.” Worse yet, if your name simply appears in the complaint, it creates a complaint against you. In one instance in which shown to American Banker, a single complaint became 35 different complaints. The consumer appears to have had no intention of complaining against all parties. Removing an erroneous complaint listing is very difficult.
Lender Fined For Asking For Proof of Disability
A Mortgage One loan originator asked a borrower for a doctor’s statement or a letter from Social Security confirming disability. This is a violation of FHA guidelines and a violation of the Fair Housing Act according to HUD. They came down with both feet on Mortgage One who agreed to monetary damages and training for all personnel on discriminatory lending. Another potential conflict between the CFPB requiring “proof” that a borrower has the ability to repay a loan, and the HUD saying you must lend, but can’t request some documentation.
Feds Say They Will Be Prosecuting Mortgage Execs
After they negotiated huge settlements from the big banks. DOJ says it will now start prosecuting the people who caused the meltdown. It appears they have some mid-level executives at Chase and Royal Bank of Scotland in their crosshairs. “Corporations can only commit crimes through flesh-and-blood people,” Sally Yates, Deputy AG said earlier this year. That means that every company that entered into a settlement, such as B of A, Citi, Wells and others, could face personal criminal prosecutions under a 10-year statute of limitations. Will the DOJ prosecute gov’t representatives that pushed for policies that contributed to the housing meltdown?… Not
The Government’s Disastrous Sole Prosecution in the Mortgage Crisis
The prosecutors finally threw in the towel trying to prosecute Abacus Bank and some of its employees. Back in 2012, the feds indicted Abacus and 19 of its employees for selling fraudulent loans to Fannie Mae. They attacked the bank because many of the loans had false borrower employment titles and income. Abacus had self-reported when they discovered the problems. They were rewarded with a full scale prosecution. No one offered them the settlements offered to the big banks. A few months ago, a jury found the bank not guilty on all charges. Now, prosecutors have dropped all charges that were pending against employees. The irony is that nearly all of the loans were performing perfectly.
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me.
Ron Henderson GRI, RECS, CIAS
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth