Mortgage Alliance Newsletter

Volume VIII | Issue 11 | April 30, 2014  

Yesterday, the Senate Banking Committee began the GSE Reform markup process, but limited the session to opening statements by Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID). The consideration of more than 100 amendments that have been filed – and how they may be incorporated or not within emerging new text for the bill – will be postponed until a later date that is yet be determined.

In the meantime, MBA is staying actively engaged with the committee leadership and key Banking Committee staff. We have focused our efforts to promote legislation that will create a vibrant secondary mortgage market that ensures a level playing field for lenders of all sizes and business models, and maintains the access to affordable mortgage credit – particularly the 30-year fixed-rate mortgage – that consumers have come to rely upon. We have also worked with the Committee to promote sensible capital requirements, appropriately draw a “bright line” between primary and secondary mortgage market activities, and properly structure the small lender mutual, a member-owned cooperative created by the legislation.

As the Committee’s mark-up progresses, we will keep you informed of the process, the changes contained in the emerging Johnson-Crapo Manager’s Amendment, and the outcome of other key amendments. To read more details from our full alert, click here.

Key MBA Action

MBA and Other Housing Trade Groups Question HUD’s Basis for FHA 2014 Loan LimitsMBA, the National Association of Home Builders, and the National Association of Realtors together sent a letter to HUD this week, asking the Department to release legal opinions developed by its staff related to the establishment of FHA’s 2014 loan limits. Previously, in response to prior MBA inquiries regarding its methodology for setting loan limits, HUD has indicated that when setting loan limits for 2014 for areas between the $271,050 base limit and the new maximum high cost limit of $625,500, HUD followed a legal opinion by its departmental lawyers which says that under the current statute HUD must use median home prices from 2008 or later. MBA strongly disagrees with HUD’s interpretation of the law and believes HUD has additional discretion under the law to moderate or even reverse many of the reductions seen in the 2014 loan limits. MBA believes the release of HUD’s legal opinions would bring greater transparency and allow MBA and others to better evaluate HUD’s basis for many of the 2014 loan limit reductions.

MBA and Other Trades Call for FHA to Revise its Rule on Private Transfer FeesMBA and other trade groups called on HUD to change FHA’s rule on private transfer fees to mirror that of the GSEs. Currently, while the GSEs permit transfer fee covenants where proceeds are delivered to a community association or nonprofit and provide a direct benefit to the property, FHA does not permit them because of its interpretation of its rule requiring free assumability of property.

MBA Sends Letter to FASB Supporting Proposed Classification of FHA Loans in ForeclosureLast week, MBA submitted a comment letter on an exposure draft for a proposed accounting rule change related to FHA-insured loans. The reason for the change is that there is currently diversity in practice on how to classify FHA loans in foreclosure in a reporting entity’s balance sheet. Some classify the asset as real estate owned and others as a receivable. FASB’s proposal would require all reporting entities to account for such assets as receivables — a position MBA supports — since it better portrays the risk associated with the asset. The FHA guarantee allows the creditor to look to the U.S. government for payment, not just proceeds from sale of the underlying property.

FHA Commissioner Gives Interview on FHA’s MIP PolicyCarol Galante, HUD’s Assistant Secretary for Housing/FHA Commissioner, was recently interviewed by The Washington Post regarding FHA’s MIP policy. In the interview, which references the letter MBA sent to HUD urging the Agency to reexamine the current MIP structure, Commissioner Galante indicated her belief that it is not yet appropriate to consider rolling back premiums while FHA’s Mutual Mortgage Insurance Fund remains below its statutory cap of two percent. Commissioner Galante’s comments in the interview largely echo remarks she made at MBA’s National Advocacy Conference on April 9th. MBA is continuing to work with HUD and other policymakers to urge them to consider options which would make FHA-insured loans more affordable.

CFPB Holds Forum on Mortgage Closing Process, Issues Report Highlighting Pain Points for Consumers and Guidelines for Participation in Pilot Project to Study eClosingsLast Wednesday the CFPB held a Forum on the Mortgage Closing Process. CFPB Director Richard Cordray was joined by HUD Secretary Shawn Donovan and leaders from FHA, VA and USDA to discuss CFPB’s efforts to reach out to consumers and industry stakeholders in order to identify reoccurring issues with the mortgage closing process. CFPB believes that technological solutions—eClosings—may help with some of these issues and to that end Director Cordray announced a pilot initiative to study how eClosings might alleviate the consumer pain points identified by CFPB. The Bureau issued Guidelines for companies that are interested in participating in the Pilot. Concurrent with the Forum, the CFPB issued a Report on Consumer Pain Points in the Closing Process. MBA staff attended the Forum and participated in a CFPB-led Roundtable the following day. HUD Issues Mortgagee Letter on HECM Non-Borrowing SpousesHUD issued Mortgage Letter (ML) 2014-07 which amends FHA’s HECM program regulations and requirements concerning due and payable status where there is a Non-Borrowing Spouse at the time of loan closing. For case numbers issued on or after August 4, 2014, non-borrowing spouses will be able to remain in their homes and they will no longer need to refinance the HECM loan upon the death of the mortgagor. According to HUD it is using the authority granted to it in the Reverse Mortgage Stabilization Act of 2013 to immediately implement this policy change, but the agency intends to publish a rule for notice and comment that will revise its existing regulations to codify the changes made through this ML.

MBA Launches New White Paper Member BenefitMBA is pleased to announce the launch of its new “White Paper Posting” membership benefit, offered exclusively to our Premier and Select level Associate Members. White papers will be posted in the Industry Resources section of MBA’s website and an announcement about the white papers will be included in a May issue of MBA NewsLink. MBA encourages applicable members to take advantage of this exciting opportunity to maximize your thought leadership. White papers must follow MBA’s white paper guidelines and will only be accepted in PDF format. They will be hosted on the MBA website or in the form of a website link to a white paper hosted on your company website. Additionally, each applicable company receives two postings (one posting at a time), per membership year. Submissions will be accepted in April and October and will remain posted until the next submission date or the end of the membership term. Please also allow 10-14 business days for posting. MBA’s white paper guidelines must be signed and included along with your white paper submission.

Updates in Brief:

Last week, the CFPB released a new Guide to Completing TILA-RESPA Integrated Disclosure Forms, a companion to the TILA-RESPA Integrated Disclosure Rule Compliance Guide recently released. The new Guide provides instructions for completing the Loan Estimate and Closing Disclosure and also highlights common situations that may arise when completing the forms. To view all CFPB resources available for the TILA-RESPA Integrated Disclosure rule, please click here.




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