Volume VI | Issue 24 | August 14, 2012 — Mortgage Action Alliance
Last week was a busy regulatory week in Washington, DC, and began with FHFA announcing it had significant concerns with the use of eminent domain to seize underwater mortgages. Then on Thursday, as anticipated, the CFPB proposed its long-awaited national servicing standards. Meanwhile, Congress continues to take an active interest in the ability to repay rule as a bipartisan group of three senators wrote to the CFPB urging it adopt a safe harbor for qualified mortgages.
Key Industry Developments
Bipartisan Senators Write QM Letter to CFPB
On Friday, August 3, 2012, Senators Roy Blunt (R-MO), Jerry Moran (R-KS) and Mark Begich (D-AK) wrote a letter to the Consumer Financial Protection Bureau (CFPB) expressing concerns regarding the proposed ability to repay rule and the definition of a qualified mortgage (QM). The bipartisan letter emphasizes the Senators’ concerns that the QM definition, if drafted too narrowly, could severely restrict access to mortgage credit, and urges the CFPB to define the QM broadly with a true legal safe harbor.
FHFA Seeking Comments on the Proposed Use of Eminent Domain to Restructure Mortgages
On Wednesday, August 8, 2012, the Federal Housing Finance Agency (FHFA) issued a press release announcing that it is seeking public comments on the use of eminent domain to restructure performing home loans. Proposals in San Bernardino County and Berkley, California as well as in Chicago, Illinois and elsewhere have recently gained national attention for their potential impact on the economy, the capital and mortgage markets as well as the future availability of mortgage credit. In its release, FHFA said it has significant concerns about the use of eminent domain to revise existing financial contracts and the alteration of the value of Fannie Mae’s and Freddie Mac’s securities holdings. The release also noted that “FHFA has determined that action may be necessary on its part to avoid a risk to safe and sound operations at its regulated entities and to avoid taxpayer expense.” MBA is part of a broad industry coalition that oppose such proposals, and recently, an op-ed by MBA President and CEO David Stevens was published in the San Bernardino County Sun. Comments to FHFA are due by Friday, Sept. 7, 2012, and may be sent to eminentdomainOGC@fhfa.gov or FHFA OGC, 400 Seventh St., SW, Eighth Floor, Washington, DC 20024.
CFPB Issues Proposed National Servicing Standards
On Thursday, August 9, 2012, Consumer Financial Protection Bureau (CFPB) Director Cordray held a media briefing announcing the impending release of proposed national servicing standards to protect consumers, especially those undergoing challenges in making their monthly payments on mortgages. The comment period is 60 days until October 9, 2012. As you are aware, MBA is on record as a supporter of uniform national servicing standards. MBA’s working group will review the proposed standards and proactively work to ensure that the standards add value to the process of treating borrowers in a fair and compassionate manner while continuing to meet any legal or contractual obligations to the investors in the underlying mortgages.
The proposal and related materials are available at the following links:
