TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/105753
year in review A Regulation What a difference a year makes! MReport takes a look back at the political turmoil, persuasive commentary, and policy changes that shaped mortgage banking's last 12 months. JANUARY FEBRUARY MARCH APRIL MAY JUNE President Obama made Richard Cordray director of the Consumer Financial Protection Bureau (CFPB) via a controversial recess appointment, exacerbating partisan tension on Capitol Hill. Under his leadership, the CFPB kicked off 2012 by announcing plans to exercise the bureau's full authority to supervise a host of nonbank financial entities, as well as mortgage originators, brokers, and servicers; in one of Cordray's first official statements as director, he emphasized his objectives, stating, "Consumers deserve to have someone who will stand on their side, who will protect them against fraud, and who will ensure that they're treated fairly." The national mortgage settlement was announced, as attorneys general in 49 states reached an agreement with the federal government, establishing a $25 billion deal with the nation's five largest mortgage servicers: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo. The terms of the bipartisan agreement made it the largest consumer financial protection settlement in U.S. history. Details of the landmark deal provided for relief efforts to distressed borrowers in states signing on for the settlement and direct payments to signing states and the federal government. Economic issues in the eurozone spark a new round of housing market concerns, with Capital Economics' Paul Dales and Paul Diggle stating, "The sovereign debt crisis in the eurozone is by far the biggest risk to our house price forecast. A disorderly breakup of the single currency would see U.S. house prices take another lurch down." Dales and Diggle ended their report on a more positive note, adding, "The healing of the housing market will be a long and gradual process, but it does at least appear to be under way." Twenty-four trade groups and associations signed off on a comment letter calling for more legal leeway within the qualified mortgage (QM) rule. Helmed by the American Bankers Association, Mortgage Bankers Association, National Association of Home Builders, and National Association of Realtors, the organizations' report targeted provisions that would establish a rebuttable presumption of compliance, describing it as one that "will force lenders to retreat to far more conservative lending standards . . . Smaller lenders will have great difficulty managing this degree of risk and the resultant litigation costs." The Federal Reserve, Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency finalized stress-testing guidelines for financial institutions with total assets worth more than $10 billion. The new rules called for banks to implement required framework including procedures that "sufficiently capture the banking organization's exposures, activities, and risks," as well as various "conceptually sound" stress-testing activities and approaches. Concluding their commentary, the agencies emphasized key capital and liquidity objectives, reiterating the plan's origins, which stemmed from Basel III mandates for the world's Global Systemically Important Financial Institutions. A congressional hearing on valuations put appraisal management companies (AMCs) under scrutiny, calling into question their validity and market position. Defending AMCs, Don Kelly, executive director of the Real Estate Valuation Advocacy Association, pointed the finger at the mortgage industry, stating, "Overzealous mortgage brokers and lenders were partly to blame for overvalued properties and inflated appraisal values." The National Association of Realtors' François K. Gregoire countered, suggesting that AMC personnel often "interfere with appraisal independence by asking or insisting that specific observations about the property, comparable sales, or market be excluded from the appraisal report." 14 | The M Report