On Monday, National Mortgage News will publish a story in its paper edition (yes, paper) that says the Federal Housing Finance Agency is working on language that will make GSE loans bullet proof from buybacks if they’ve been current for 36 months. Freddie Mac officials crafted some of the language, we’re told. But the devil is in the details. There are important caveats. If you don’t subscribe call 800-221-1809. You can’t get this stuff from free periodicals/websites…
OK, eventually we will put the thing on our website and part of it will be free...
By the way, the single GSE securitization platform could be up and running by the fourth quarter or first of 2013. Or not…
Meanwhile, Friday brought an onslaught of important mortgage developments, including the Treasury Department glomming onto every future nickel that the GSEs will earn. But the biggest news was the Consumer Financial Protection Bureau’s long awaited loan officer compensation proposal. Pasted below, in the CFPB’s own words, are the bullet points of the proposal. Or you can read Brian Collin’s story on the NMN website: www.nationalmortgagenews.com.
• Require Lenders to Make a No-Point, No-Fee Loan Option Available: It is often difficult for consumers to compare loans that have different combinations of points, fees and interest rates. Under the proposed rule, creditors would have to make available to consumers a loan without discount points or origination points or fees, unless the consumers are unlikely to qualify for such a loan. These options would enable a consumer buying or refinancing a home to better compare competing offers from different creditors, better able to compare loan offers from a particular creditor, and decide whether they would receive an adequate reduction in monthly loan payments in exchange for the choice of making upfront payments.
• Require an Interest-Rate Reduction When Consumers Elect to Pay Upfront Points or Fees: Consumers can pay points, which are expressed as a percentage of the loan amount, and fees to covers costs associated with origination or prepaid interest charges. While these points and fees come in many different names and combinations, they all should function similarly to reduce the interest rate and thus a consumer’s monthly loan payments. The CFPB is seeking comment on proposals to require that any upfront payment, whether it is a point or a fee, must be “bona fide,” which means that consumers must receive at least a certain minimum reduction of the interest rate in return for paying the point or fee.
• Set Qualification and Screening Standards: Under state law and the federal Secure and Fair Enforcement for Mortgage Licensing Act, loan originators currently have to meet different sets of standards, depending on whether they work for a bank, thrift, mortgage brokerage, or nonprofit organization. The CFPB is proposing rules to implement Dodd-Frank Act requirements that all loan originators be qualified. The proposal would help level the playing field for different types of loan originators so consumers could be confident that originators are ethical and knowledgeable. The proposed rule includes Character and Fitness Requirements: All loan originators would be subject to the same standards for character, fitness and financial responsibility; Criminal Background Checks: Loan originators would be screened for felony convictions; and Training Requirements: Loan originators would be required to undertake training to ensure they have the knowledge necessary for the types of loans they originate.
• Prohibit Payment of Steering Incentives to Mortgage Loan Originators: In 2010, the Federal Reserve Board issued a rule that was designed to curtail the practice of loan originators directing consumers into higher priced loans based not on the consumer’s interest, but on the possibility that the loan originator could earn more money. The Dodd-Frank Act included a similar provision banning the practice of varying loan originator compensation based on interest rates or other loan terms. The CFPB’s rule would implement the Dodd-Frank Act provision and clarify certain issues in the existing rule that have created industry confusion.
• Place Restrictions on Arbitration Clauses and Financing of Credit Insurance: The proposal implements Dodd-Frank Act provisions that, for both mortgage and home equity loans, prohibit including mandatory arbitration clauses in loan documents and increasing loan amounts to cover credit insurance premiums.
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