Mortgage Action Alliance Newsletter

Key MBA Action

TRIA Reauthorization Bill Passes in Senate Last Thursday the Senate, by a vote of 93-4, passed S. 2244, The Terrorism Risk Insurance (TRIA) Reauthorization Act of 2014. If enacted, S. 2244 would reauthorize TRIA for seven years while making modest reforms to the existing program. Earlier in the week, MBA President and CEO David H. Stevens sent a letter of support for S. 2244 to Senate Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) and issued a statement following the Senate vote. The TRIA reauthorization process now moves to the House of Representatives, where the Republican leadership is currently attempting to garner support for a competing TRIA reauthorization proposal, authored by Financial Services Committee Chairman Jeb Hansarling (R-TX).

MBA Pushes Back on FHFA OIG Report that Questions Recent GSE Purchase Mix FHFA’s Office of the Inspector General (OIG) released a report last week indicating that GSE purchases of mortgages from their largest counterparties have declined significantly since 2011, and that smaller lenders have considerably increased direct sales to the GSEs. MBA believes this is a positive development, which the Association has supported with policy positions that call for fair and competitive markets for lenders of all sizes and business models (e.g., guarantee fees based on loan quality, not volume or asset size).

Unfortunately, the OIG report inexplicably concludes that the shift to “smaller and nonbank lenders” may increase the GSEs’ exposure to counterparty risk and raised costs for managing this risk. The report’s narrative ignores the significant risks that the GSEs took through their aggregation models, and the OIG’s “findings” defy basic principles of risk management — that diversification of business partners lowers the GSEs’ and the taxpayer’s risk, period. Taxpayers, the GSEs and most of all, consumers, benefit from a strong, diversified market where lenders of all sizes and business models can constructively and fairly participate. MBA will be preparing a detailed rebuttal to the OIG report to set the record straight on the important benefits that a more competitive and diversified seller base has had on the GSEs.

MBA Files Comment Letter on FHA’s HAWK Program, Suggests Changes to Further Help Borrowers Last Monday, MBA filed a comment letter with FHA on the Homeowners Armed with Knowledge (HAWK) housing counseling program, which would provide first-time homebuyers who receive HUD-certified counseling with FHA mortgage insurance premium (MIP) reductions. MBA believes that the current FHA premium structure is pricing many otherwise qualified borrowers out of the market, and in its comments MBA congratulated FHA for its initiative with HAWK, but suggested that the program be restructured to offer borrowers greater material reductions in their monthly payments by shifting proposed reductions in the upfront MIP to the annual MIP. On a $200,000 loan — assuming a four percent base note rate, 30-year term, financing of the upfront MIP, and that the borrower completes all counseling and makes all payments within program guidelines — MBA’s alternative proposal would save a borrower $15,369 over the full 30-year life of the loan as compared to savings of $12,834 over the same time period under FHA’s HAWK proposal. MBA’s comment also expressed concern with several other aspects of the FHA proposal, including its requiring of lenders to bear the cost of some portions of the counseling, the utility of post-closing counseling, and the limiting of the initial phase of the HAWK program to lenders and servicers selected by FHA.

MBA Submits Letter to CFPB, Offers Thoughts on Proposed Changes to Annual Privacy Notice Requirement MBA submitted a comment letter to the CFPB last Monday, regarding its proposed amendments to the annual privacy notice requirement under the Gramm-Leach-Bliley Act. In the letter, MBA strongly supported the CFPB’s efforts to reduce the burden and costs to the industry associated with providing annual privacy notices, while recognizing the importance of clearly disclosing to consumers a financial institution’s policies for the treatment and sharing of nonpublic information. While supportive, the letter also expressed concern that the ability to post a privacy policy online in certain circumstances — rather than send annual notices — will not be as widely available as it should be. MBA then went on to suggest that any notice that complies with Regulation P should be qualified to use the proposed amendment’s alternate delivery method if the financial institution is otherwise eligible.

CFPB Proposes Expanding Complaint Database to Include Consumer Narratives The CFPB is seeking comments on a proposed policy statement that would add “unstructured” consumer complaint narratives to the CFPB’s publicly available consumer complaint database concerning consumer financial products and services. According to the Bureau, only the narratives for which they have obtained consumer consent, which have then additionally been scrubbed to remove personally identifiable consumer information, would be posted. In addition, under the proposal, lenders would be free to post public responses to consumer complaint narratives as long as they did not contain personally identifying information. MBA has consistently and strongly opposed efforts by CFPB to release unverified information of this type, as it would be costly to the market and consumers alike. Comments on the proposed policy are due 30 days from the date of publication in the Federal Register, and MBA intends to provide an official comment.

FHA Gives Final Extension on Recertification Filing Deadline In response to issues many lenders have experienced completing the annual recertification process through the Lender Electronic Assessment Portal (LEAP), FHA has provided a final extension of the recertification filing deadline for Title I and Title II lenders and mortgagees with the following fiscal year end dates: December 31, 2013; January 31, 2014; February 28, 2014; and March 31, 2014. The deadline to submit complete recertification packages for this group, including the submission of financial information and annual renewal fees, will now be July 31, 2014.

MBA Compliance Essentials is on the Road with its TILA-RESPA Integration Forums This summer, MBA is coming to a city near you with its traveling TILA-RESPA Integration Forums. These Compliance Essentials Forums provide a day-long deep dive into all of the major implementation issues that companies need to be working on one year prior to implementation. Forum speakers include top-level legal, compliance and technology experts — including a CFPB representative. Upcoming opportunities include next week’s stop in Los Angeles on Wednesday, July 23rd; Atlanta on Thursday, July 31st; and Washington, DC on Thursday, August 7th. MBA Member registration starts as low as $500 a person, depending on the date of purchase.