From the Trump administration's initial efforts at reg relief and GSE reform to dramatic shifts in the servicing landscape, here's a look back at the top stories shaping the mortgage industry during the first half of 2017.
U.S. President-elect Donald Trump takes the oath of office as First Lady-elect Melania Trump stands during the 58th presidential inauguration in Washington, D.C., U.S., on Friday, Jan. 20, 2017. Donald Trump will become the 45th president of the United States today, in a celebration of American unity for a country that is anything but unified. Photographer: Andrew Harrer/Bloomberg
Trump administration takes shape
— Leading housing policy influencers in President Donald Trump's new administration include Housing and Urban Development Secretary Ben Carson and Treasury Secretary Steven Mnuchin.

— Moments after Trump's swearing in, HUD suspended a 25-basis-point cut to Federal Housing Administration insurance premiums that was announced, but not instituted, during the waning days of now-former HUD Secretary Julian Castro's term under the Obama administration.

— After an interview that some read as support for the plan known as "recap and release" to return Fannie Mae and Freddie Mac to the private sector, Mnuchin struck a more cautious tone during his confirmation hearing, assuring lawmakers he intends to work with them on a long-term plan for the government-sponsored enterprises. (more on the GSEs in a moment…)
What's next?
— The roles of FHA commissioner and Ginnie Mae president still need to be filled and the FHA insurance premium cut remains on hold.

— The administration's federal budget proposal would cut HUD funding by 13%, while charging lenders an administrative fee to cover $30 million of the $160 million needed to overhaul the FHA's risk management systems, including technology first implemented in the 1960s.

— Mnuchin has set a goal of tackling housing finance reform within the next year. And a 150-page Treasury report on revamping financial industry regulations calls for dialing back mortgage regulations that have "unnecessarily tightened the credit box."
Rows of houses stand near Pittsburgh, Pennsylvania, U.S., in this aerial photo taken on Friday, April 9, 2010. Photographer: Andrew Harrer/Bloomberg
Rising rates, low inventory fuel sharp drop in originations
— Simultaneous increases to interest rates and home prices have created an affordability crisis nationwide. Combined with a shortage of available housing inventory and the purchase mortgage market that was expected to emerge in 2017 has been anemic.

— The rise in rates has put a damper on refinance activity, which was at a 10-year low during the first quarter.

— The soaring home prices have created market volatility that's making it difficult for appraisers to accurately pinpoint home values. And a new tariff on Canadian lumber threatens to squeeze an already tight housing inventory and further drive up soaring home prices.
The U.S. Capitol building stands before sunrise in Washington, D.C., U.S., on Friday, March 24, 2017. House GOP leaders are hurtling toward a vote Friday on their embattled health-care bill without knowing for sure whether they have enough support to pass the measure, after yielding to Trump administration demands to act now. Photographer: Andrew Harrer/Bloomberg
Dodd-Frank do-over
— With Republicans in control of the White House and both chambers of Congress, overhauling the Dodd-Frank Act has been a top priority. While the extent of any changes and their overall effects have been hotly debated, the House vote the voted mostly along party lines to pass the Financial Choice Act in early June.

Democrats remain staunchly opposed to the effort and the Senate appears a long way off from approving its own version of the bill. However, there may be some common ground between Republicans and Democrats on certain elements of the regulatory reforms.
Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), listens during a Senate Banking Committee hearing in Washington, D.C., U.S., on Thursday, April 7, 2016. Testimony from Cordray today may shed light on the status of several regulations that could curtail revenue from payday loans, prepaid cards and other financial products. At a March 16 hearing, Cordray hinted that a rule to limit prepaid cards won't be finished until June. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Richard Cordray
CFPB: the Constitution, Cordray and consent orders
— The CFPB's long-running feud with PHH Corp. entered its third year in 2017. What started as an enforcement action against alleged mortgage insurance kickbacks has morphed into a full-blown legal challenge to the constitutionality of the agency's single-director structure. A 10-judge panel heard oral arguments on the case, but has yet to issue its ruling.

— The case's path took a curious turn with the election of Donald Trump in November. The Trump Justice Department later sided with PHH in the case, and because of a peculiarity in the CFPB's authorizing statute, the agency requires Justice Department approval to appeal to the Supreme Court.

— The case has also led to a tense standoff between Trump and CFPB Director Richard Cordray. It could also have further effects on other federal agencies with independent structures. For his part, Cordray has signaled that he has no intention of resigning. Cordray was subjected to a barrage of accusations and innuendo by House Republicans during a hearing in April, and was later threatened with contempt charges by the House Financial Services Committee.

— Meanwhile, the agency has spent much of the year ramping up enforcement actions, filing consent orders, lawsuits and other regulatory actions against TransUnion and Equifax, Prospect Mortgage, Nationstar, Experian and Fay Servicing, among others. But as many smaller companies that traditionally would have rolled over and settled allegations appear emboldened to fight, litigation is soaking up a significant share of the agency's resources.
Citigroup Inc. signage is displayed outside a bank branch in San Francisco, California, U.S., on Friday, Jan. 13, 2017. Citibank Inc. is scheduled to release earnings figures on January 18. Photographer: David Paul Morris/Bloomberg
Citi calls it quits in servicing
— Citigroup is getting out of mortgage servicing, after agreeing to sell a $97 billion mortgage servicing portfolio to New Residential Investment Corp. and subservice its remaining accounts by the end of 2018.

— The move is part of the bank's "simpler, smaller, safer and stronger" strategy to increase returns and sharpen its focus on core U.S. retail customers.

New Residential raised nearly $850 million in a public stock offering to fund the deal. The REIT will subservice the loans through its affiliate, Nationstar Mortgage Holdings, highlighting the growing prevalence of nondepository servicers and a newfound interest in servicing assets by capital markets investors.
House searching concept with a magnifying glass
More Ocwen scrutiny
— After finalizing separate deals with regulators in California and New York to remove restrictions on its business, beleaguered servicer Ocwen Financial Corp. finally appeared ready to reinvent itself after years of regulatory scrutiny.

— Then in April, the Consumer Financial Protection Bureau sued Ocwen, while regulators from more than 30 states issued cease-and-desist orders, all accusing the company of widespread servicing errors such as sending inaccurate monthly statements to borrowers, improperly crediting payments, and mishandling taxes and insurance in escrow accounts.

— Ocwen denies the allegations and said it goes above and beyond to help troubled borrowers. As part of its defense, the company has challenged the constitutionality of the CFPB, echoing claims currently being litigated in the case between the agency and PHH.
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Ocwen fallout
— Prior to the CFPB lawsuit, Ocwen set aside $12.5 million for a potential settlement, but talks broke down. While it's unusual for regulators to pursue action against the same company twice in three years, state regulators felt they've been strung along by Ocwen after years of promises that were never fulfilled.

— Ocwen's stock price plummeted on the news of the regulatory action and the company risked losing its biggest customer, New Residential Investment Corp. Instead, New Residential agreed to acquire a 5% stake in Ocwen and extend its subservicing relationship for five years.

— Ocwen also sued a subsidiary of Fidelity National Information Services, accusing it of padding timesheets and claiming excessive and improper expenses while FIS was conducting an independent audit of Ocwen on behalf of the California Department of Business Oversight. FIS has denied the allegations and the case is still pending.
Representative Mel Watt, a Democrat from North Carolina and U.S. President Barack Obama's nominee as director of the Federal Housing Finance Agency (FHFA), speaks during a Senate Banking Committee nominations hearing in Washington, D.C., U.S., on Thursday, June 27, 2013. Watt faced lawmakers skeptical of his knowledge of housing finance issues today at a Senate Banking Committee hearing on his nomination to oversee mortgage giants Fannie Mae and Freddie Mac. Photographer: Andrew Harrer/Bloomberg *** Local Caption *** Mel Watt
New hope, and urgency, for housing finance reform
— As the capital buffers of both GSEs could reach zero as soon as January 2018, resolving the conservatorship of Fannie and Freddie is increasingly becoming more urgent. Federal Housing Finance Agency Director Mel Watt appears poised for a showdown with Congress after warning that he is willing to act unilaterally to rebuild capital at Fannie and Freddie in order to prevent a potential draw on the Treasury Department.

— The Treasury Department and FHFA face growing calls to end the quarterly sweeps of GSE profits and allow Fannie and Freddie to rebuild capital. Meanwhile, investors that sued the government over the arrangement won a ruling that allows them to review previously secret documents related to the profit sweeps.

— Industry groups have backed competing blueprints for addressing the conservatorship. GSE reform. A Mortgage Bankers Association proposal calls for Fannie and Freddie to be rechartered as the first two mortgage "guarantors" that would be regulated as utilities and owned by private shareholders, with their securities carrying an explicit government guarantee. Another plan proposed by a group of investment banks and backed by the Independent Community Bankers of America would return the GSEs to shareholders without substantive policy reforms — a move that MBA President David Stevens has criticized as unsafe in the long term.