TheMReport — News and strategies for the evolving mortgage marketplace.
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the latest se r v ic i ng Or ig i nat ion SECONDARY MARKET s e c on da r y m a r k e t a na ly t ic s Business Declines for Second Straight Month at Fannie Mae An uptick in new business wasn't enough to offset the decline in Fannie's gross mortgage portfolio. CFPB Finalizes Changes to Mortgage Rules The bureau continues its efforts to ease the implementation of new regulations. W ith months to go before the implementation of the Consumer Financial Protection Bureau's (CFPB) qualified mortgage (QM) rules, the agency released several finalized amendments and clarifications created to ease the process. First handed down in January, the QM guidelines include an "Ability-to-Repay" rule designed to ensure lenders "make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans." The bureau also introduced this year new loan officer compensation rules to remove incentivized "steering" toward certain products, servicing rules to establish 58 | The M Report protections for borrowers facing foreclosure, and strengthened consumer protections for highcost mortgages. The amendments and clarifications being adopted in September were first proposed in June. "Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace," said CFPB director Richard Cordray. "Today's rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers." Among the points addressed: The definition of "loan originator" has been tightened due to concerns about the original rule's language inadvertently applying to bank tellers or other administrative staff who engage in routine customer service activities. The agency also revised the effective dates of many of the loan originator compensation rule's provisions to January 1, 2014, in order to simplify compliance "since compensation plans, training, and licensing and registration are often structured on an annual basis." In addition, CFPB made revisions to exclude employee compensation from points and fees for retailers of manufactured homes, reasoning "including such compensation in points and fees does not provide a meaningful benefit to consumers." For servicers, CFPB amended its rule that prohibits servicers from making the "first notice or filing" for the foreclosure process until the borrower is at least 120 days delinquent. The new rule specifically excludes certain notices (required under state law) sent to borrowers that may provide information about legal aid, counseling, or other resources. F annie Mae's book of business shrank for the second consecutive month in July as its gross mortgage portfolio continued to decline, the company reported in its monthly volume summary. According to the GSE, the book of business shrank at a compound rate of 1.7 percent in July, slowing down slightly from June's rate of 1.9 percent. Year-to-date, the book's average monthly growth rate was -1.1 percent as of July 31. The book's value totaled approximately $3.169 trillion at the end of the month, down about $5 billion from June. After slowing in June, the ongoing contraction in Fannie's gross mortgage portfolio picked up speed, climbing to an annual growth rate of -32.4 percent. The last time the portfolio plummeted that quickly was January 2010, when the rate was -44.8 percent. Year-to-date through July, the portfolio's average monthly growth rate was -22.1 percent. Meanwhile, new business acquisitions did a little better, edging up to $73.4 billion from June's $72.6 billion.