Federal banking regulators are proposing a capital surcharge on nontraditional mortgages to address negative amortization as part of a new risk-based capital regime called Basel Ia.The Basel Ia is designed to be more risk-sensitive than the current Basel I standard by incorporating loan-to-value ratios and increasing the risk buckets for one- to four-family mortgages. The funded portion of an interest-only or payment-option mortgage would be treated like any other mortgage. However, there is an additional capital charge for the "unfunded portion of the maximum negative amortization amount" in nontraditional mortgages, according to the Federal Deposit Insurance Corp. Currently, the lowest credit risk weighting for 1-4s is 50% and the highest is 100%. Under Basel Ia, the lowest risk weight is 20% on loans with 60% LTVs or less and 150% for loans with LTVs above 95%. (Loan-level private mortgage insurance lowers the LTV.) Adoption of Basel 1A would be optional for most banks, except for certain institutions sticking with Basel I to avoid higher capital requirements, an FDIC official said. The FDIC board has approved the Basel Ia proposal, but it won't be issued for a 90-day comment period until later this month or January.
-
The massive mortgage business saw a first quarter profit mitigated by nearly $300 million in hedging losses.
10h ago -
The Consumer Financial Protection Bureau has seen excessive property-inspection charges, fees that loan mods should eliminate and improper line-item labels.
April 24 -
Michael Tannenbaum, whose experience in the financial services industry spans over 15 years, has a track record of helping companies scale and grow.
April 24 -
A majority of consumers earning more than $100,000 annually said they were concerned about their own ability to purchase a home, demonstrating how affordability issues are impacting those at many socioeconomic levels, the University of Michigan study found.
April 24 -
The nonbank's results add to other indications that the first quarter's "higher for longer" rate scenario had an upside for efficient servicing operations.
April 24 -
The latest rate increases contributed to a 1% drop in purchases from the previous week and 15% annually, according to the Mortgage Bankers Association.
April 24