Lenders protest plan to include civil actions in counterparty suspensions

A growing number of industry groups are calling on the Federal Housing Finance Agency to rethink proposed amendments that would expand suspension criteria for counterparties. Opposition to the proposal, which could affect companies selling loans to or servicing mortgages for two large government-related players, largely centers on the inclusion of certain forms of civil misconduct as suspension criteria. The FHFA has said the criteria would only be applied to certain "covered misconduct" such as "fraud or embezzlement, etc.," but some trade organizations are concerned it could be extended to relatively small infractions.

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Ginnie Mae updates HECM securitization regulations

Beginning Oct. 1, the federal insurer of government-backed mortgages will permit issuers to offer securitizations on multiple participations — or borrower drawdowns on available equity —? per HECM per month. Current rules allow for only one securitization per loan in any monthly period based off a single participation. The move is expected to reduce liquidity pressures on issuers of HECM mortgage-backed securities and ensure the loan program remains viable and sustainable, according to Ginnie Mae. Under the new regulations, the loans can be securitized and pooled as soon as they are ready.?

Mortgage defect rates likely to improve, Aces says

Mortgage manufacturing quality continued to improve during the first quarter, a bright spot in an industry that tolerates a certain level of misrepresentations at times of tight margins and low volume. The critical defect rate was 1.78% in the first quarter, down from 1.84% in the fourth quarter and an all-time high of 2.47% in the third quarter of 2022, according to post-closing quality control file reviews conducted by Aces Quality Management. For the same period last year, the defect rate was 1.93%. The reviews use Fannie Mae's defect taxonomy to categorize errors.

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Problem mortgages growing for life insurers, AM Best says

Problem mortgages owned by life insurance companies increased 77% since 2019, with a significant portion of those being residential mortgages, a report from AM Best found. Still, distressed loans no matter the property type make up a mere $4.5 billion of the $691.2 billion of the total portfolio currently owned by life companies. Last year, these companies had $639.8 billion, well above the $363.3 billion portfolio in 2013. Over the past 10 years because of the low interest rate environment, life companies increased their exposure to mortgages because commercial real estate, the bulk of their portfolio, offered better returns than investment grade bonds, which wasn't the case in 2013.

California to offer insurers more leeway to set rates for fire risk

California's insurance commissioner announced a new regulatory plan backed by the industry that would allow insurers to factor future climate risks into their pricing and require them to offer more coverage in fire-prone areas. The announcement on Thursday, bolstered by an executive order from Governor Gavin Newsom, came after several major insurers, including State Farm and Allstate, said they would stop issuing new homeowner policies or renewing existing ones in a state that has been ravaged by wildfires in recent years.?

CFPB outlines sweeping data proposal, drawing swift bank condemnation

The Consumer Financial Protection Bureau has proposed substantial changes to the Fair Credit Reporting Act that would require any company that collects and sells consumer data to be covered by the 1970 law. The proposal marks a monumental shift in how courts have interpreted requirements under the FCRA, experts said, and could limit the ability of consumers to verify their identities to companies such as Netflix or Hulu while also opening the floodgates for data brokers and aggregators to be sued in class-action lawsuits.

Equifax plans to expedite underwriting with UK-based software

Equifax announced a new product integration with a British software firm that should lead to expedited underwriting of mortgage borrowers working at small- and medium-sized businesses, it said. The Atlanta-based data provider's digital income and employment verification tool, The Work Number, which provides the data to lenders and underwriters, is now available to companies using the payroll-service platform offered by Iris Software Group. The partnership brings the digital capabilities of The Work Number to Iris' client base of small and medium-sized businesses, allowing them to instantly deliver the employment history and salary of borrowers.?

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