Volume VI | Issue 22 | July 31, 2012
CFPB Director Richard Cordray faced a hostile audience last week when he testified before a House oversight subcommittee. Mr. Cordray acknowledged publicly that lenders were unlikely to originate non-QM loans, at least in the near term. The QM rule is expected to be finalized in late 2012.
Key MBA Actions
San Bernardino Newspaper Runs David Stevens Article on Mortgage Seizure Plan
On Sunday, July 22, 2012, the San Bernardino County (CA) Sun published an article penned by MBA’s President and CEO, David H. Stevens, offering the likely negative impacts of a proposal that cities within San Bernardino County, particularly Fontana and Ontario, are considering that would allow the local government to seize underwater mortgages through “eminent domain.” In the article, Stevens warns that implementing the proposed plan would decrease the availability of mortgage credit and drive down home values in any jurisdiction that institutes such a program.
MBA Responds to FHFA’s Proposed Affordable Housing Goals for Fannie Mae and Freddie Mac
On Thursday, July 26, 2012, MBA submitted comments on the FHFA’s proposed Affordable Housing Goals for Fannie Mae and Freddie Mac for the years 2012-14. This letter was developed by the Secondary and Capital Markets and Multifamily Committees. The letter expresses support for affordable housing finance but reiterates MBA’s position that imposing numeric affordability goals interferes with Fannie Mae’s and Freddie Mac’s primary mission to maintain market liquidity. MBA also asked the FHFA to reconcile the goals with other imminent market-shaping regulations such as those implementing the Dodd-Frank Act’s risk retention and ability to repay requirements.
MBA Participants in Coalition Effort Urging Regulators to Extend the Basel III Comment Period
On Thursday, July 26, 2012, MBA along with 20 other trade associations signed a letter urging the federal regulatory agencies to extend the comment period from 90 days to 150 days for the Basel III proposed rules addressing regulatory capital requirements. The letter noted that the Basel III Notice for Proposed Rulemakings must be viewed in the context of how other initiatives, including but not limited to the Volcker Rule and derivatives regulations, combine to affect non-financial businesses’ ability to raise capital.
Senate Poised to Vote on FHA Nominee; MBA Sends Letter Supporting Nomination
Last Thursday, the Senate reached an agreement to bring Carol Galante’s nomination to serve as FHA Commissioner to a vote in the full Senate. MBA sent a letter on Friday encouraging the Senate to approve the nomination when it comes to a vote.
FHA’s Mortgagee Letter 12-11 Implementation Date Postponed
On Thursday, July 26, 2012, MBA staff and member representatives met via conference call with senior FHA staff to discuss concerns with FHA’s Mortgagee Letter 12-11. This meeting was scheduled after MBA sent a comment letter developed by the MBA Loan Administration Steering Committee and the MBA HUD Claims Working Group. During the teleconference MBA representatives were notified that FHA will be issuing a formal delay of the August 1, 2012, implementation date for ML 12-11. FHA has not indicated a new implementation date.
Key Industry Developments
REO Disposition: Balancing Private and Public
On Wednesday, July 25, 2012, MBA staff attended the “REO Disposition: Balancing Private and Public Interests” symposium hosted by the Asian Real Estate Association of America, the National Association of Hispanic Real Estate Professionals, and the National Association of Real Estate Brokers, among others. Acting FHA Commissioner Carol Galante addressed the participants and highlighted the Distressed Asset Stabilization Program. Additional speakers included representatives from Fannie Mae, Freddie Mac, Enterprise Community Partners, the Federal Housing Finance Agency and the Federal Reserve. The symposium explored the impacts of REO properties on neighborhood stabilization and REO disposition strategies.
CFPB Director Richard Cordray Addresses QM Before House Subcommittee
On Tuesday, July 23, 2012, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray testified before the Hose Oversight and Government Reform Subcommittee concerning the CFPB’s reform efforts. The discussion was fueled by concerns for access to credit. Cordray established the importance of the definition of a qualified mortgage in guiding lending behavior for years to come, saying “If the QM is drawn too narrowly that would upset the mortgage market. That could be a notable example of a rule itself restricting access to credit.”
Key Political Developments
House
AZ-6: In the first publicly released poll for the intra-party Republican incumbent pairing featuring Reps. David Schweikert
(R-AZ-5) and Ben Quayle (R-AZ-3), the National Research organization (7/22; 300 AZ-6 likely GOP primary voters) gives Schweikert a major 49-33% advantage for the August 28th primary. The winner takes the seat in the fall and should hold it throughout the decade.
