TheMReport

TH E M R EP O RT | 13 MONTH IN REVIEW GSE Reform, Stress Tests, and Tech Mergers Make Headlines A lot happened this month in the industry. Movement continued on the GSE reform front, a number of tech firms merged platforms, and the Dodd- Frank stress tests revealed which institutions consumers should be worried about. Check out some of the headlines you might have missed this month. 1 Congressman French Hill (R-Arkansas) has proposed a new bill that would require the U.S. Treasury Secretary to study the FHFA's conservatorship of Fannie Mae and Freddie Mac on an annual basis, as well as present recommendations to Congress on how to progress GSE reform. The bill comes on the back of the Mulvaney Bill, which aims to end the GSEs' financial obligation to the National Housing Trust Fund and the Capital Magnet Fund. 2 The Federal Housing Finance Agency released the results of its Dodd-Frank stress tests, and the results were quite interesting. According to the tests, Federal Home Loan banks (FHLs) are well-poised to withstand another economic downturn or meltdown, while Fannie Mae and Freddie Mac would require billions in draws from the U.S. Treasury. 3 A Consumer Financial Protection Bureau investiga- tion found a number of mortgage lenders in violation of new servicing rules, which dictate record-keeping requirements, as well as a number of options for distressed buyers. These requirements are largely depen- dent on servicing technology and, according to the CFPB's findings, many servicers are using outdated or deficient technology and software to meet these demands. 4 Stakeholders in some of the industry's most important groups, including the National Association of Realtors, National Association of Home Builders and U.S. Mortgage Insurers, penned a letter to FHFA Director Mel Watt, urging him to reduce or consider eliminating loan-level price adjustments (LLPAs) on federal loans. These LLPAs are keeping many qualified buyers from entering the market, according to the group. 5 Fannie Mae and Freddie Mac both saw contracting portfolios for May, with Fannie's shrinking 32 per- cent over April and Freddie's dropping 27 percent. Fannie had already fallen below its 2016 cap of $339.3 billion 6 Wells Fargo recently released a survey called "How America Views Homeownership," which exam- ined how U.S. citizens feel about and approach homeownership in today's market. According to the results, 93 percent of Americans believe home- ownership is an achievement to be proud of, while 74 percent believe now is a good time to buy. 7 CoreLogic released its June MarketPulse report, which revealed that single-family home purchases are down more than 50 percent since 10 years ago. On a more positive note, the report also showed that denial rates on home loan applica- tions have decreased, dropping from 18.7 to 13.2 percent from 2007 to 2014. 8 Comptroller of the Currency Thomas J. Curry has clarified his stance on fintechs, saying that while fintechs may not replace traditional banks and financial institutions, they are, however, important to innovation. According to Curry, the key to ensuring the peaceful coexistence of fintechs and banks is advocating for responsible in- novation among the tech companies— not just innovation for innovation's sake. 9 Ocwen Financial has agreed to pay $30 million to settle two lawsuits alleging it falsely certified its compliance on the Home Affordable Modification Program and FHA insurance programs. Rather than go to court or issue an admission of fault, Ocwen has opted to pay $15 million to the United States and another $15 million toward private citizens' attorneys' fees. 10 The Federal Reserve objected to two of the 33 plans submit- ted by bank holding companies as part of the Comprehensive Capital Analysis and Review. Those plans were from Deutsche Bank and Santander Holdings. While the Fed didn't outright object to Morgan Stanley's, the bank has asked the firm to draft and submit a new plan by December 29.

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