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Volume 9 | Issue 28 | Tuesday, July 16, 2019

The Lede


MBA Offers Recommendations to CFPB on Regulatory Flexibility Act

The Mortgage Bankers Association, in a July 15 letter to the Consumer Financial Protection Bureau, offered several recommendations on the Bureau's review of its rules under the Regulatory Flexibility Act.


News & Trends

House Passes MBA-Supported VA Securitization, Financial Literacy Bills

The House approved two bills yesterday, strongly supported by the Mortgage Bankers Association, which clarify when Department of Veterans Affairs home loans qualify to be pooled into Ginnie Mae securities, as well as legislation that would increase access to housing counseling for consumers.

House Committee Begins Markup of Industry Legislation; MBA Sends Letter

The House Financial Services Committee last week began a markup session on a number of housing finance-related bills. Ahead of the first votes, the Mortgage Bankers Association sent a letter to Committee leadership offering views of several bills of interest to MBA membership. Survey: Western Markets At Most Risk for Increased Foreclosure Inventory, Irvine, Calif., said although most respondents to a recent survey expect only "slight" changes in foreclosures and bank-owned inflow in the second half of 2019, nearly half cited the Western U.S. as the highest risk of increase in distressed inventory.

Mortgage Payments Within Reach for High School Grads in Most Cities; Down Payments, Not So Much

The good news is, households including at least one person with a high school diploma or GED can afford the typical mortgage payment in most large metro areas across the U.S., said Zillow Inc., Seattle. But soaring home values that have outpaced incomes have made down payments a barrier for many, particularly first-time home buyers.

Loan Defects on the Increase

ACES Risk Management, Pompano Beach, Fla., released its Mortgage QC Trends Report, showing the overall critical defect rate increased on a quarterly and yearly basis.

Fitch Ratings: New U.S. RMBS Products Faring Well So Far; Earthquakes No Problem

Two reports from Fitch Ratings, New York, offer positive news on the status of U.S. residential mortgage-backed securities.

MBA News

MBA Risk Management, QA and Fraud Prevention Forum in Chicago Sept. 15-17

The Mortgage Bankers Association's Risk Management, QA and Fraud Prevention Forum takes place Sept. 15-17 at the Sheraton Grand Chicago.

Top National News

Legislation Clarifies Securitization Timeline for VA Loans

Scotsman Guide, July 10, 2019--Arnie Aurellano
A bill approved this week by the House clarifies when mortgages backed by the U.S. Department of Veterans Affairs qualify to be pooled into Ginnie Mae securities.The Mortgage Bankers Association sent a letter to House leadership ahead of the vote on the bill, urging its passage.

New Bill Slashes FHA Mortgage Insurance for First-Time Homebuyers

HousingWire, July 10, 2019--Jessia Guerin
The House of Representatives passed a bill Tuesday that slashes the cost of upfront mortgage insurance for first-time homebuyers using mortgages backed by the Federal Housing Administration. The Mortgage Bankers Association applauded the bill's passage. "MBA has long advocated for increased access to housing counseling as a means to provide a more positive experience for first-time homebuyers unfamiliar with the homeownership process, as well as for other underserved communities," MBA said.

What to Expect When You're Expecting a Report on GSE Reform

American Banker, July 9, 2019--Hannah Lang (subscription)
Recent expectations have grown that the Trump administration may prepare aggressive action to end the conservatorships of Fannie Mae and Freddie Mac, but some mortgage policy observers are speculating that a much-anticipated Treasury Department report on housing finance reform plans could be short on details.

VA Loan Churning is Driving Up Mortgage Costs for All Government Borrowers

HousingWire, July 9, 2019--Jessica Guerin
The Urban Institute recently released a study asserting that fast prepayments as a result of churning is driving up rates on all government mortgages by seven basis points, or 0.07%.

Government Bond-Market Measure Says Recession Risk Growing

Wall Street Journal, July 9, 2019--Daniel Kruger (subscription)
The yield on short-term Treasurys has been higher than on long-term notes for more than 30 consecutive trading sessions, a sign that investors are concerned about the durability of the decadelong economic expansion.

Federal Banking Regulators Finalize Changes to Capital Rules

American Banker, July 9, 2019--Jon Prior (subscription)
The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve finalized a plan Tuesday to ease certain capital rules but are taking more time on a part of the proposal tied to commercial real estate lending.

Many Indebted Borrowers Consider Mortgages Out of Reach: Wells Fargo

National Mortgage News, July 10, 2019--Bonnie Sinnock (subscription)
Nearly two-thirds of consumers think they must be debt-free to get home financing when in fact they can have debt-to-income levels as high as 43% or greater, according to Wells Fargo.

Most Renovating Homeowners Not Tapping HELOCs

National Mortgage Professional, July 10, 2019--Phil Hall
Nearly half of homeowners are planning a property renovation in the next two years, but only one-quarter will finance it with a home equity line of credit, according to new data from TD Bank.

Don't Look Now, But Home Equity Delinquencies are Rising

American Banker, July 10, 2019--Andy Peters (subscription)
The economy remains strong and Americans hold trillions of dollars in equity in their homes. So why are delinquencies tied to home equity products on the rise?

Financial Watchdog Shifts From Enforcer to Educator

Wall Street Journal, July 12, 2019--Yuka Hayashi (subscription)
Critics say the Consumer Financial Protection Bureuau's push shifts the burden of consumer protection from financial companies to ordinary citizens.

Trump Team Grows Wary of Fannie-Freddie Fix Before 2020 Election

Bloomberg, July 12, 2019--Saleha Mohsin, Jennifer Jacobs, Austin Weinstein
The Trump administration is growing wary of taking bold steps toward freeing Fannie Mae and Freddie Mac from federal control before the 2020 election, said people familiar with the matter, in part because of the political risk of potentially upending the U.S. mortgage market.

Insurance Companies Expand Multifamily Financing Options

Colorado Real Estate Journal, July 13, 2019--Cooper Williams
According to research conducted by the Mortgage Bankers Association, the insurance companies' mortgage debt holdings increased by 9% in 2018, which is higher than the overall market average for multifamily debt holdings.

Banks Nearly Have REO Monday Off Their Backs a Decade After Crisis

Naitonal Mortgage News, July 14, 2019--Jon Prior (subscription)
Banks have reduced their holdings of foreclosed one- to four-unit family residences to roughly $2.6 billion of homes, down from more than $14 billion during the fallout of the housing market's collapse in 2010, according to Federal Deposit Insurance Corp. data.

Life Insurers Upped Mortgage Investments Risky in Case of Downturn

National Mortgage News, July 15, 2019--Brad Finkelstein (subscription)
Life insurance companies increased their mortgage investments to levels higher than historical norms, creating more potential danger for their portfolios in the event of a real estate downturn, a Fitch Ratings report said.

Nomura to Pay $25 Million Over Mortgage Bond Traders' Lies

Bloomberg, July 15, 2019--Matt Robinson
A Nomura Holdings Inc. unit will repay customers about $25 million to settle U.S. regulators' allegations that it failed to supervise traders who made false statements in negotiating sales of mortgage securities.

Realogy Slapped with Class Action Suit for Securities Fraud

HousingWire, July 15, 2019--Jessica Guerin
According to the suit filed Thursday by The Rosen Law Firm in the U.S. District Court of New Jersey, Realogy filed false and misleading statements with the Securities and Exchange Commission by not disclosing that it was engaging in "anticompetitive behavior by requiring property sellers to pay a buyer's broker an inflated fee."

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