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MBA Letter Discourages FTC Proposed Rulemaking
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The Mortgage Bankers Association urged the Federal Trade Commission not to follow through with a proposed rulemaking on mortgage loan practices, arguing that it would overlap similar efforts underway by the Federal Reserve Board and lead to confusion among borrowers, as well as create additional regulatory burdens to lenders.
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Foreclosure Myths
Washington Post (07/31/09) P. A22; Kittle, David
Lenders and investors always lose money when they foreclose on a home, Mortgage Bankers Association Chairman David Kittle, CMB, writes in a letter to the editor in response to a recent Washington Post story. Kittle writes that the July 28 article, "Foreclosures Are Often in Lenders' Best Interest," wrongly suggests that lenders profit from foreclosures. Lenders are trying to keep borrowers in their homes but, he insists, but they also have a responsibility to mitigate losses when possible -- which sometimes means foreclosure instead of loan modification. Even when a lender resorts to foreclosing, Kittle points out, it still suffers a loss.
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Agency Says No to FHLB Securitization
American Banker (07/31/09) P. 3; Sloan, Steven
The Federal Housing Finance Agency this week recommended against the Federal Home Loan Banks securitizing mortgages at the present time. In a report to Capitol Hill lawmakers, agency head James Lockhart recommended that the banks instead continue to use programs that involve financial institutions selling their mortgages to a FHLB, which then pass them on to a third-party investor for securitization. However, this course of action earns FHLBs almost no money and essentially makes the mortgage purchase programs a members' service rather than a competitor to Fannie Mae and Freddie Mac.
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New Mortgage Insurance Applications Up in June From May
Wall Street Journal (07/31/09) Shwiff, Kathy
A new Mortgage Insurance Companies of America study shows that new residential mortgage insurance applications rose 1.5 percent to 56.3 million in June from a month earlier, although that was off 38 percent from June 2008. Defaults and cures were up from a year ago, but defaults have declined from their December and January peaks and cures are also lower than earlier in the year. The survey also found that about 75 percent of new mortgages carry either public or private MI, with federally funded guarantees accounting for nearly 70 percent of covered mortgages and private MI making up the remainder.
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Fannie, Freddie Unlikely to Return Aid
Washington Post (07/31/09) P. A20; Goldfarb, Zachary A.
Fannie Mae and Freddie Mac may need additional financial help from the U.S. government; and they are unlikely to repay all of the stimulus money they receive, which stands at $85 billion so far, confirmed Federal Housing Finance Agency director James Lockhart. While the Obama administration has relied heavily on the two firms to support the housing recovery effort, Lockhart said they would continue to be unprofitable for another year or so. As for the future of Fannie Mae and Freddie Mac, he said the private sector should be the source of funding for the mortgage market and that the companies should not be nationalized and turned into an agency like the FHA.
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Judge Throws Out RESPA Rule Challenge
Inman News (07/31/09) Carter, Matt
A U.S. district judge has dismissed a lawsuit against HUD by the National Association of Mortgage Brokers, which claimed that forcing brokers to disclose yield spread premiums was unfair given that bank loan officers and other originators for direct lenders are not subject to like requirements. Under the new Real Estate Settlement Procedures Act rules slated for implementation on Jan. 1, loan originators must use a standard good faith estimate form that requires mortgage brokers to make known yield spread premiums and provide borrowers a closing cost credit equal to those rebates.
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HUD Announces New HAMP Loan Mod Guidelines
HUD yesterday implemented new changes to its FHA loan modification to comply with the Obama Administration's Home Affordable Modification Program, known as HAMP. The Mortgage Bankers Association praised the changes, saying it gives lenders "another tool" to help homeowners stay in their homes.
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Peterson, Frank Announce Derivatives Legislation Outline
House Financial Services Committee Chairman Barney Frank, D-Mass., and House Agriculture Committee Chairman Collin Peterson, D-Minn., yesterday released a concept paper that will guide the two committees as they develop legislation to regulate derivatives.
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QuoteLink
"While MBA believes carefully crafted, smart, uniform regulatory improvements can help restore investor and consumer confidence in the nation?s lending and financial markets, it also strongly believes that if regulatory solutions are not well-conceived, they risk exacerbating a credit crisis that trillions of public dollars have still not fully resolved."
--from an MBA letter to the Federal Trade Commission on a proposed rulemaking regarding certain lending practices.
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