The Mortgage Bankers Association 99th Convention & Expo highlighted key trends that are now impacting the real estate finance space. The first issue is all the uncertainty that abounds when it comes to rules and regulations.
The final deadline for the Consumer Financial Protection Bureau qualified mortgage rule is just around the corner in January. The rule will define exactly what a safe mortgage is under Dodd-Frank's ability-to-repay provision.
Lenders have no idea if the rule will come with a safe harbor provision that provides litigation protection in cases where the lender meets all of the qualified mortgage requirements at the point of origination.
All of this uncertainty is curtailing some lending activity and making it difficult to address another key market trend—namely the fact that policy makers and the industry have yet to establish a definitive structure for bringing private capital back into the market.
And with regulations and rules coming in waves, compliance tools and technology systems are playing a key role in keeping financial firms compliant through their new solutions.
Here's just a snippet of the initiatives LPS rolled out at the conference this year to deal with compliance issues:
Lender Processing Services announced that originators wanting to check up on borrowers' employment histories will soon be able to order Equifax Verifications of Employment through the LPS Loan Quality Gateway system. Verifying that information is a key part of ensuring the loan is eventually safe from buyback risk.
With appraisal issues also a scrutinized part of the underwriting process, LPS added Valuation Insight to its Loan Quality Gateway platform. The tool uses business rules in the system and LPS databases to check property appraisals for completeness, accuracy, consistency and Uniform Appraisal Data compliance.
One message that is clear from the conference is the MBA intends to encourage policymakers to end redundancies in rules that are released from different housing agencies.
The association's CEO made it clear the MBA will stress to lawmakers the need to find coordinated and balanced solutions that will preserve reasonable regulations while also ensuring lenders are not scared away from expanding mortgage products to potential homeowners.