So far 2014 is turning into a mixed bag for nonbank financial firms focused on the mortgage sector. And it's not likely to change given the current regulatory attitude that amounts to nothing short of the legalized extortion of the mortgage business.
So if you are in an auction with a bunch of stupid money who just want to put assets to work and thereby earn a management fee, do you bid aggressively – above the true value of the assets – or do you stand back and let the clown win the auction?
Federal Reserve Chair Janet Yellen achieved the primary goal of any new Fed chief and avoided any obvious land mines. But what was lacking in the dialogue, both from Yellen and the media, was a serious discussion of what’s next for national economic policy.
Recent data from the Mortgage Bankers Association shows the extent of the collapse of new applications for mortgages. The numbers are down 60% annually and reached a 13-year low. However, higher interest rates are not the chief reason for poor mortgage market performance by a long shot.
The headlines in most news stories and economic commentaries indicate that the housing market is continuing to improve and with it the U.S. economy. But if you dig into the numbers a bit, the reality in the housing market is a good bit more subtle than the headlines suggest.
A financial industry publication recently reported, “Carrington Mortgage, Citadel Servicing and New Penn Financial are planning securitizations of newly originated subprime mortgages.” The publication went on to say in breathless tones that “[t]he offerings, on the slate for 2014, would confirm recent predictions that deals would soon start flowing in the asset class…”
As we approach January 2014, the entire mortgage lending industry is braced for impact in terms of compliance and operational issues related to the Dodd-Frank reform law. The “qualified mortgage” or QM and “qualified residential mortgage” or QRM designations related to mortgage lending now define the outer limit of risk taking for many bank lenders.
The implementation of new rules and regulations affecting the housing sector has been underway for several years, driven by Basel III, the Dodd-Frank Act and revisions to existing law. How this tangle of conflicting limitations and incentives is affecting the housing sector is something laymen only partially understand. Although the brave new supervisory regime pretends to protect consumers...
The CFPB left the grace period open-ended and most in the industry interpreted that to mean that it will last throughout the rest of 2015, at least. Unfortunately, as welcome as that grace period is, TRID remains a costly and complicated fix that has enormous implications for the whole industry..
“Bad letters damage the brand,” Katherine Porter says. “There’s a contagion effect of this. I think bad letters are unjust. They disproportionately harm the borrowers we need to help the most.” Read More
The answer may be found somewhere between commandeering the entire process and “throwing it over the fence.” For lenders, paying more attention to the source of the data and information used in finalizing settlement (title searching, valuation and the like) could hold the key. This means data reporting collected in a more robust, accurate and verifiable fashion. Read More