Federal regulators and Congress continue to release new guidance and requirements to assist residential mortgage loan borrowers facing economic hardships due to the pandemic. But in light of the anticipated volume of requests and associated burden on servicers, they also are offering some regulatory relief. This alert contains a summary of relevant mortgage servicing requirements,

COVID-19 has strained all aspects of life in the United States, including the housing and mortgage industries.  Social distancing, stay-at-home orders, and business closures have disrupted the abilities of many workers to complete their duties on a “business as usual” basis.  In the mortgage market, there is a direct impact on a mortgage lender’s ability

On Monday, March 30, 2020, from 4:00 p.m. – 4:30 p.m. EDT, Mayer Brown partners Holly Spencer Bunting and Krista Cooley will discuss actions taken in response to the COVID-19 pandemic by the Federal Housing Administration, the Federal Housing Finance Agency, Fannie Mae and Freddie Mac.  This call is a part of Mayer Brown’s Global

On Thursday, March 26, 2020, from 3:00 p.m. – 3:30 p.m. EDT, Larry Platt will discuss the provisions of recent federal legislation that impact residential mortgage loans.  This call is a part of Mayer Brown’s Global Financial Markets Teleconference Series.

Congress’s response to the COVID-19 pandemic is expansive legislation that provides support to federal agencies,

Federal housing finance authorities issued temporary relief measures for the benefit of mortgage loan borrowers affected by the COVID-19 outbreak and its economic consequences. The Federal Housing Administration and the Federal Housing Finance Agency (in its role overseeing Fannie Mae and Freddie Mac) have announced measures that require servicers to offer relief to borrowers who

We recently discussed the efforts of the Alternative Reference Rates Committee (ARRC) to prepare for the upcoming discontinuance of LIBOR as an index rate for residential mortgage and consumer loans. Our alert examined ARRC’s recommendations regarding an appropriate substitute rate (the Secured Overnight Financing Rate, or SOFR) and ARRC’s recommended changes to implement SOFR.  We

The Federal Housing Finance Agency is continuing to consider how Fannie Mae, Freddie Mac, and the Federal Home Loan Banks should address Property Assessed Clean Energy (“PACE”) programs. PACE programs are established by state and local governments to allow homeowners to finance energy-efficient projects through special property tax assessments. The obligation to repay results, in

According to the Mortgage Bankers Association, the Consumer Financial Protection Bureau intends to revise its Qualified Mortgage definition by moving away from a debt-to-income ratio threshold, and instead adopting a different test, such as one based on the loan’s pricing. The CFPB also apparently indicated it may extend, for a short time, the temporary QM

The agencies responsible for the securitization credit risk retention regulations and qualified residential mortgages (“QRMs”) are asking for public input as part of their periodic review of those requirements. Comments on the review are due by February 3, 2020.

Five years ago, in response to the Dodd-Frank Act, an interagency final rule provided that a securitizer of asset-backed securities (“ABS”) must retain not less than five percent of the credit risk of the assets collateralizing the securities. Sponsors of securitizations that issue ABS interests must retain either an eligible horizontal residual interest, vertical interest, or a combination of both. The Act and the rule establish several exemptions from that requirement, including for ABS collateralized exclusively by residential mortgages that qualify as “qualified residential mortgages,” as defined in the rule.

The Act provides that the definition of QRM can be no broader than the definition of a “qualified mortgage” (“QM”), as that term is defined under the Truth in Lending Act (“TILA”) and applicable regulations. QMs are a set of residential mortgage loans deemed to comply with the requirement for creditors to determine a borrower’s ability to repay. The Office of the Comptroller of the Currency (“OCC”), Federal Reserve Board, Federal Deposit Insurance Corporation (“FDIC”), Securities and Exchange Commission (“SEC”), Federal Housing Finance Agency (“FHFA”), and Department of Housing and Urban Development (“HUD”) decided to define a QRM in full alignment with the definition of a QM. The agencies concluded that alignment was necessary to protect investors, enhance financial stability, preserve access to affordable credit, and facilitate compliance. Their rule also includes an exemption from risk retention for certain types of community-focused residential mortgages that are not eligible for QRM status but that also are exempt from the TILA ability-to-pay rules under the TILA. The credit risk retention requirements became effective for securitization transactions collateralized by residential mortgages in 2015, and for other transactions in 2016.

The agencies of the credit risk retention regulations committed to reviewing those regulations and the definition of QRM periodically, and in coordination with the CFPB’s statutorily mandated assessment of QM.
Continue Reading Agencies to Review QRM / Securitization Credit Risk Retention Rule

If only the U.S. Treasury had a magic wand to ensure that the dozens of recommendations released last night in its long-awaited reform proposals for housing finance would become a reality; in that case, one could expect real-time results in the quest for an end to GSE conservatorship and the strengthening of the FHA. Instead,