Below is a collection of articles, news, and announcements associated with our industry.
QRM Update: The FDIC has voted to release its proposed definition of a Qualified Residential Mortgage (QRM). QRMs will be exempt from risk retention requirements. Under the proposed definition Fannie Mae, Freddie Mac, FHA, and VA loans will be QRMs. For non-agency loans to meet the definition and to avoid being subject to risk retention, among other requirements, they must have down payments of 20% or more and DTI of 28% / 36% or less.
Wouldn’t it be nice if Congress would extend the “close-by” deadline for those trying to get the Homebuyer Tax Credit? Sure it would. Wouldn’t it be even nicer if they did it now, June 21st, before we all break our backs trying to get the thousands of transactions closed by June 30th? Any anxiety out there right now?
Glen Corso, Executive Director of The Community Mortgage Banking Project and an industry advocate, brought to the BlogTalkRadio show today an up to the minute status report on HR 4213, the bill being considered by the Senate which, if passed, will extend the “close-by” deadline to qualify to receive the Homebuyer Tax Credit from June 30th to September 30th. According to Glen, there is very little controversy on whether or not to extend the deadline. Most are in favor of it. The rest of the bill, though, includes significant controversy and because of it, might not pass any time soon. As a result, this is not a time to relax. Push to close all the purchase loans that you can before the existing June 30th deadline.
Glen also provided a shocking update from the House and Senate Conference Committee working on the compromise language to be included in the Financial Reform bill. This is the bill which includes, among many other things, a requirement for mortgage originators to retain risk on 5% of the loans they originate and sell to investors. The House version of the bill included no carve outs from its requirement. The Senate version carved out from its requirement loans which were “well underwritten”. The Senate carve out – as defined in the bill and if implemented – would exempt most of the loans being made today from the 5% risk retention requirement. It has been anticipated that in the Conference Committee, the Senate version of the risk retention provision would survive. Glen surprised us when he told us that earlier in the morning the House conferees pushed for a carve out, but of only government guaranteed loans. Government guaranteed loans included FHA, VA, and Rural Development loans, but not Fannie Mae and Freddie Mac type loans. Lets hope the Senators win this negotiation.
Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :
MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.
Tune in every Monday at 1:00pm(et) for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending
Senate Bill 3217 Restoring American Financial Stability was the focus of discussion on the show Monday, particularly two recently passed amendments which are of great interest to the mortgage banking industry. The amendments deal with risk retention and loan officer compensation. One is good for the industry and the other is not. Glen Corso, Executive Director of The Community Mortgage Banking Project, joined the show to bring a first hand understanding of the amendments and their status.
The amendment that is good for the mortgage industry deals with the risk retention provisions of the original bill. The original bill would have required mortgage originators to retain “skin in the game”. It would have required originators to retain 5% of the risk on all the loans they originated and sold to investors. The amendment exempts from the 5% risk retention requirement certain mortgage loans which meet the definition of Qualified Mortgage Loans. Since 90% or more of today’s loans will meet the definition of Qualified Mortgage Loan, the amendment significantly reduces the number of loans on which originators will be required to retain risk.
The amendment that is not good for the mortgage industry restricts how loan originators are to be compensated. Glen Corso explained that this amendment was introduced Tuesday evening last week and passed on Wednesday morning, giving Glen and other industry advocates little time to discuss its drawbacks with Senators. The amendment restricts paying commission based on the terms of the loan, which likely means no overage or yield spread premium.
The Senate Bill is not yet law. It must first be passed by the full Senate and then go through a reconciliation with the House version of a financial reform bill before it will be final.
We will discuss the risk retention amendment and the loan officer compensation amendment in further detail in separate posts later this week.
Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :
MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.
Tune in every Monday at 1:00pm(et) for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending
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