- 02/13/2020
11:30 am - 1:00 pm
Our speaker will be Richard Fergus from the Arizona Department of Financial Institutions.
Thanks to National MI for being our Lunch Sponsor.
Arizona Mortgage Lenders Association
Our speaker will be Richard Fergus from the Arizona Department of Financial Institutions.
Thanks to National MI for being our Lunch Sponsor.
It’s February — officially the shortest month of the year. Unofficially, it’s the longest if your job is reading the thousands of pages of comment letters submitted in response to the banking agencies’ Basel III Endgame proposal.
We highlight ways to improve the rule so it won’t unduly burden banks or borrowers.
1-Big Thing: There Goes the House
Think buying a home is expensive now? Wait until banks have to boost their capital levels thanks to the Basel III Endgame, the U.S. bank regulators’ spin on international capital standards for depository institutions.
Why it matters: U.S. regulatory agencies propose raising capital requirements on bank assets by up to 20 percentage points. It promises to send bank mortgage rates soaring and drive many to flee the mortgage origination business.
The big picture: Borrowers unable to make a large down payment will bear the burden of the rule change because high-LTV loans would be considerably more expensive for banks to hold in portfolio than they are today.
The current U.S. and Basel III (international bank regulations) capital frameworks enable banks to reduce the risk weights on high-LTV (above 80%) home loans if they are covered by mortgage insurance (MI). But the proposed Basel III Endgame does not take MI into account in risk-weight calculations.
By the numbers: 52% of bank-originated home loans are produced by the 31 large banks covered by Basel III Endgame.
The bottom line: Industry and housing advocates are apprehensive about the ramifications of the U.S. regulators’ proposal on low-wealth borrowers.
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