A Big Push From Small Lenders
Smaller banks are stepping in to take mortgage market share from big lenders, often by concentrating on local expertise and customer service. "What we're seeing is the community banks and regional market lenders taking a larger market share of residential business," notes Norman Koenigsberg with New Jersey-based First Choice Bank subsidiary First Choice Loan Services. The firm's loan origination volume increased to $2.26 billion in 2012 from $1.2 billion in 2011, and the company will very likely end this year with about $2 billion in originations, says a company spokesman. Koenigsberg sees First Choice Loan Services' expansion as the result of its hiring of qualified talent in regional markets, and a strong focus on purchase mortgages. He says local knowledge is particularly essential to borrowers in competitive and complex real estate markets.

From "A Big Push From Small Lenders"
New York Times (12/27/13) Prevost, Lisa

 

Community Banks on Road to Recovery, FDIC Says

U.S. community banks rebounded from the recession in 2012 and their recovery continues to move forward, according to a Federal Deposit Insurance Corp. (FDIC) study on 6,141 lenders. Those banks enjoyed a collective profit of $16.4 billion during the year, and their average profit margin topped 1 percent for the first time in five years while the number and rate of community bank failures decreased. "Recent signs point to renewed interest in new bank charters," the FDIC says. "Community banks continued to strengthen their balance sheets in 2012 by reducing problem assets and increasing capital levels." The report determined that community banks' greater profitability was fueled by higher noninterest income and lower loss provisions, which easily compensated for the decline in net interest income.

From "Community Banks on Road to Recovery, FDIC Says"
Albuquerque Business First (12/26/13) Domrzalski, Dennis

Happy New Year!

Have a safe and happy 2014.

Merry Christmas!

Housing Starts Jump in November

Housing starts leaped 22.7 percent in November to a seasonally adjusted annual rate of 1.09 million units, the Commerce Department reported yesterday. Starts were 29.6 percent above their rate a year ago. However, permits for new construction, which are considered a gauge of future demand, fell 3.1 percent to an annual rate of 1.01 million.

---ABA Daily Newbytes

Mortgage Rates Continue Rising

The average rate for a 30-year fixed-rate mortgage climbed to 4.35 percent from last week’s rate of 4.16 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.34 percent

Fannie Mae Mortgage-Guarantee Fees Increased by U.S. Overseer

Fannie Mae and Freddie Mac are set to raise the fees they charge lenders to insure loans as part of an effort to dial down their presence in the mortgage market, the Federal Housing Finance Agency (FHFA) announced. For the first time, the firms also will begin charging higher fees in four states -- Connecticut, Florida, New York, and New Jersey -- where long foreclosure timelines make it more costly for them to dispose of homes they take over after borrowers default. In addition, the FHFA is revising its fee structure so that borrowers with poor credit will pay more. The fee hikes, typically passed on to borrowers in the form of higher interest rates, take effect in March and the following month. Fees are set to rise an average of 14 basis points on a typical 30-year fixed mortgage.

From "Fannie Mae Mortgage-Guarantee Fees Increased by U.S. Overseer"
Bloomberg (12/10/13) Benson, Clea

Consumer Bureau Defends ‘Back to Basics’ Rules

Consumer Financial Protection Bureau regulations to rein in the mortgage market are simple to understand and easy to follow, said Director Richard Cordray at a Consumer Federation of America event on Thursday. Cordray promised that the bureau would be “vigilant“ in enforcing the “back to basics” regulations for mortgage lenders and servicers, according to prepared remarks.

From "Consumer Bureau Defends ‘Back to Basics’ Rules"
The Hill (12/05/13)

Smaller Mortgage Lenders Lead Field

Big banks have been retrenching from the mortgage business recently, leaving smaller players to pick up larger pieces of business. As of the third quarter, smaller mortgage players held a 60 percent market share of the U.S. origination market, up from 39 percent in 2009, according to industry publication Inside Mortgage Finance. The trend is opening up opportunities for small companies such as loanDepot.com, regional banks such as M&T Bank and larger mortgage players like Quicken Loans.

From "Smaller Mortgage Lenders Lead Field"
Wall Street Journal (12/05/13) Raice, Shayndi

Small Banks Fear Regulation 'Tidal Wave'

Advocates of small banks and credit unions say that rules intended to protect consumers from abuse by major Wall Street banks have ended up hurting smaller institutions and could force them out of business. Lawmakers on both sides of the aisle seem open to possible fixes to blunt impacts on smaller institutions from the Consumer Financial Protection Bureau (CFPB) and other agencies. Over the summer, Sen. Elizabeth Warren (D-Mass.), one of the most vocal advocates for financial reform in Congress and the architect behind the CFPB, suggested a two-tiered banking regulation for large and small institutions. Multiple legislative efforts to give regulatory relief to small banks and credit unions are currently working their way through Congress, though few have gained much traction.

From "Small Banks Fear Regulation 'Tidal Wave'"
The Hill (12/04/13) Hattem, Julian

Shift on Nonconforming Mortgages

Some of the nation's largest banks will offer loans that don't conform to new gold-standard lending definitions under sweeping mortgage regulations set to take effect next month. Executives at Wells Fargo said the bank will make some loans that don't meet the definition of a "qualified mortgage," a new designation that allows banks to demonstrate they have met requirements ensuring borrowers can afford their mortgages. JPMorgan Chase, Bank of America and Citigroup are also likely to make some loans that fall outside of the standard, according to bank representatives, although the loans are likely to be limited to affluent bank customers. While lenders aren't barred from making loans that fall outside the "QM" rules, they could face greater legal liability on those mortgages. Mortgage investors are also much less likely to purchase those loans. Wells Fargo said it has opted to continue providing mortgages that don't meet the safer legal standard because recently originated loans that don't satisfy the QM criteria have had very few defaults.

From "Shift on Nonconforming Mortgages"
Wall Street Journal (12/03/13) Timiraos, Nick

Mortgage Rates Rise

The average rate for a 30-year fixed-rate mortgage rose to 4.29 percent from the previous week’s rate of 4.22 percent, Freddie Mac said Thursday. At the same time in 2012, the 30-year FRM rate averaged 3.32 percent.

Happy Thanksgiving!

St Casimirs wishes all of you a safe and pleasant Thanksgiving.

From Freddie Mac:

With Single-Family Seller/Servicer Guide (Guide) Bulletin 2013-25, we are announcing that our 2014 base conforming loan limits will be maintained at the existing 2013 levels. The loan limits in designated high-cost areas will also remain unchanged with the exception of some counties where the loan limit will increase.

The Guide Bulletin is in line with the Federal Housing Finance Agency (FHFA) announcement today regarding the 2014 conforming loan limits.

New Mortgage Disclosure Rule Could Raise Costs to Consumers

On Wednesday, the Consumer Financial Protection Bureau (CFPB) released its much-anticipated final rule that merged federal mortgage disclosure forms. The two-year effort was required under the Dodd-Frank Act and was intended to simplify disclosures and help consumers more clearly understand the total costs of a loan. But bankers, while generally supportive of the final rule, say they are concerned that some of the changes need to be fixed or mortgage lenders will have to raise the costs of loans to consumers.

From "New Mortgage Disclosure Rule Could Raise Costs to Consumers"
American Banker (11/21/13) Berry, Kate

Mortgage Rates Slip

The average rate for a 30-year fixed-rate mortgage edged down to 4.22 percent from last week’s rate of 4.35 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.31 percent.

New Mortgage Form Said Required of Large and Small Banks

New U.S. rules requiring simplified mortgage paperwork will go into effect in August 2015 without an exemption for small lenders, according to individuals briefed on plans by the Consumer Financial Protection Bureau. CFPB Director Richard Cordray plans to unveil the rule Wednesday at a field hearing in Boston.

From "New Mortgage Form Said Required of Large and Small Banks"
Bloomberg (11/19/13) Dougherty, Carter

Are You Satisfied?

Satisfaction With Mortgage Lenders Hits 7-Year High

Customer satisfaction with mortgage lenders increased to its highest level in seven years as companies eagerly competed for first-time homebuyers and other new clients, according to a new survey. Quicken Loans topped the list among primary mortgage lenders for the fourth straight year, followed by BB&T, U.S. Bank, PNC Bank, and Chase, according to the J. D. Power 2013 U.S. Primary Mortgage Origination Satisfaction Study, released Thursday.

From "Satisfaction With Mortgage Lenders Hits 7-Year High"
Chicago Tribune (11/14/13) Podmolik, Mary Ellen

Fracking Concerns

Much of the East Coast oil boom is taking place on property where oil or gas rights have been sold to energy companies, bringing potential riches to some lucky landowners and headaches to some banks. At least three lenders -- Tompkins Financial in Ithaca, N.Y., Spain's Santander Bank, and State Employees' Credit Union in Raleigh, N.C. -- are refusing to make mortgages on such properties. The boilerplate New York state mortgage agreement, used by Fannie Mae and Freddie Mac, states that "you cannot cause or permit any hazardous materials to be on your property and it specifically references oil and gas ... That alone would make it a problem," says Greg May, vice president of residential mortgage lending at Tompkins.

From "Fracking Boom Gives Banks Mortgage Headaches"
American Banker (11/12/13) Peters, Andy

St Casimirs thanks veterans and active military for their service.

Mortgage Slump's Full Toll on Small Banks Revealed -- But Fixes Remain Elusive

Mortgage banking income at banks with less than $20 billion of assets fell an average of 21 percent from the second quarter and 27 percent from a year earlier, according to new data from Keefe, Bruyette & Woods. The firm said activity is expected to slow even more in coming quarters as a spike in long-term interest rates continues to restrain refinance activity, and as more banks grapple with the Consumer Financial Protection Bureau's qualified-mortgage rule. The slowdown in mortgage revenue was a punch in the gut for banks that are trying to boost fee income, and was a major reason that non-interest income in the third quarter fell 9 percent from the second quarter and 11 percent from a year earlier, according to American Banker research of 350 banks' results.

From "Mortgage Slump's Full Toll on Small Banks Revealed -- But Fixes Remain Elusive"
American Banker (11/06/13) Stewart, Jackie

Mortgage Rates Decline for Second Week

The average rate for a 30-year fixed-rate mortgage fell to 4.10 percent from last week’s rate of 4.13 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.39 percent.

Regulators Vow to Work With Industry on Mortgage Rules

Consumer Financial Protection Bureau (CFPB) Director Richard Cordray and acting Federal Housing Finance Agency (FHFA) Director Edward DeMarco on Monday promised to work with lenders to implement a bevy of new mortgage regulations intended to stave off a repeat of the foreclosure crisis of the late 2000s. Cordray's remarks, made during the Mortgage Bankers Association's 100th annual conference, sought to assuage fears that the new regulations will hurt lenders once they take effect early next year. DeMarco, meanwhile, assured the group that the FHFA does not plan to surprise the industry with additional rules involving the size of U.S. guaranteed loans.

From "Regulators Vow to Work With Industry on Mortgage Rules"
The Hill (10/28/13) Goad, Ben

Most Consumers Don’t Know Credit Score, Survey Finds
Only 42 percent of consumers know their credit scores, according to an Ipsos survey conducted for ABA and released Friday. The survey of 1,000 American adults found that 56 percent did not know their scores, which is calculated based on consumer credit reports and affects lenders’ credit decisions. “People might have a scare when they apply for a loan and discover that a low credit score could mean a higher interest rate or no loan at all,” said ABA SVP Nessa Feddis. ---ABA Daily Newsbytes

Fed Said to Issue Warning About Lax Loan Underwriting Practices

The Federal Reserve and the Office of the Comptroller of the Currency are recommending lenders bolster underwriting standards for leveraged corporate loans as borrowing of the high-risk debt nears levels not seen since before the financial crisis, according to sources who asked not to be identified because the actions have not been made public. The regulators sent letters to some of the largest banks -- including Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., and others -- asking them to avoid originating loans that can be considered "criticized," or debt classified as having some flaw that may result in a loss.

From "Fed Said to Issue Warning About Lax Loan Underwriting Practices"
Bloomberg (10/24/13) Huanss, Kristen

Local Op-Ed: Relationships Distinguish Community Banks

Relationships with customers distinguish community banks from larger financial institutions, according to a new community banker op-ed in the Alexandria (Va.) Times.

John Marshall Bank regional executive Ted Johnson wrote in the newspaper that being on a first-name basis with customers trumps impersonal relationships and that community banks are second to none in serving small businesses.

“Community bankers have personal business relationships with customers and a finger on the pulse of the community,” Johnson wrote. “With this involvement and knowledge of the local business climate, community banks are more likely to be receptive to small business loans.”  --ICBA

Friday Rate Update

Mortgage Rates Edge Up

The average rate for a 30-year fixed-rate mortgage edged up to 4.28 percent from last week’s rate of 4.23 percent, Freddie Mac said Thursday. At this time in 2012, the 30-year FRM rate averaged 3.37 percent.

Consumer Loan Demand Weakens with Fewer Home Purchases: Fed

The Federal Reserve noted in a new report that lenders continued to be battered in the third quarter as consumer loan demand weakened slightly in some areas of the country. In New York, bankers reported "softer" loan demand from consumers, particularly for residential mortgages and home loan refinancing. Philadelphia-area bankers, meanwhile, expressed a similar sentiment but said that most financial companies continue to report "modest increases" in overall lending.

From "Consumer Loan Demand Weakens with Fewer Home Purchases: Fed"
American Banker (10/17/13) Borak, Donna

Senators Call for Flood Insurance Affordability Study


A bipartisan group of 24 senators wrote last week to their Senate leadership expressing concern about the flood insurance premium hikes that took effect Oct. 1. The rate increases, mandated by the 2012 Biggert-Waters flood insurance reform law, “could render flood insurance unaffordable and unattainable for up to 4 million homeowners and businesses nationwide,” the senators said.

They called for an affordability study that can provide “immediate rate relief” for homeowners as Biggert-Waters is implemented, and urged Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) to attach a provision for this to a viable Senate bill.

--ABA Daily Newsbytes

Fed's Powell: Regulators Ought Not Unduly Burden Community Banks

Federal Reserve Governor Jerome Powell said Thursday during a community banking conference that financial regulators must be careful to not over-burden community banks with onerous rules, which could unintentionally impede lending activity that is vital for small business growth and job creation. "Although both the traditional bank regulatory agencies and the Consumer Financial Protection Bureau are constrained, to some extent, by the language in the Dodd-Frank Act, all regulators should aim to ensure that we are not unduly rigid in our actions," he said. He added that the Fed will continue to study the overall effects of the new rules on the safety and soundness of community banks and to consider whether modifications to rules, or the way in which they are implemented, could achieve regulators' aims while reducing the regulatory burden on banks.

From "Fed's Powell: Regulators Ought Not Unduly Burden Community Banks"
Reuters (10/03/13)

Economy Continues to Threaten Community Banks

Community banks in the U.S. south are showing signs of improvement, but they continue to face income pressure tied to lower loan demand and low interest rates, according to the Office of the Comptroller of the Currency. Officials said Wednesday that banks have higher capital levels and more money available for loans, based on an analysis of financial data through the second quarter. While more than 80 percent of the 511 community banks in the nine southern states received the highest level of rating, loan demand declined at 38 percent of the district's institutions, according to the comptroller's office.

From "Economy Continues to Threaten Community Banks"
Tennessean (09/26/13) McGee, Jamie

Rate Update

Mortgage Rates Fall to Nine-Week Low

The average rate for a 30-year fixed-rate mortgage fell to 4.32 percent from last week’s rate of 4.50 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.40 percent

More Americans Pay Mortgage First, Then Credit Cards

Financially distressed borrowers are beginning to make their mortgage payments before paying their credit card bills, according to a study released Thursday by Transunion, marking the reversal of a trend that emerged after the housing market crashed. The credit information provider said this is a positive development, reflecting the rebound in U.S. home prices and fewer borrowers stuck with mortgages valued more highly than their homes. In 2009, credit cards were 30 days delinquent at a rate of 2.82 percent versus a rate of 3.83 percent for mortgages. These rates dropped to 1.82 percent and 1.91 percent, respectively, as of 2012, according to Transunion.

From "More Americans Pay Mortgage First, Then Credit Cards"
CNN Money (09/19/13) Tseng, Nin-Hai

Lending Levels

Mortgage Lending Reaches 5-Year High

Mortgage lending surged to a five-year high in 2012, driven by a steep rise in refinancing as borrowers took advantage of the lowest mortgage rates in at least six decades, according to a new report from the Federal Reserve. The analysis, released Wednesday, found that lenders originated nearly 9.8 million mortgages last year, up 38 percent from 7.1 million in 2011.

From "Mortgage Lending Reaches 5-Year High"
Wall Street Journal (09/18/13) Timiraos, Nick

St Casimirs Remains Stable

Forget Too Big to Fail: Some Banks Now Too Small to Succeed

While too-big-to-fail banks are getting even bigger thanks to help from Uncle Sam, smaller community bankers are finding it more difficult to survive, in part because they allocate more of their limited resources to meeting the new regulations stemming from the global financial crisis. Now almost too small to succeed, these community banks say they are facing increased pressure to sell out to their larger brethren. At the end of 2007, at the onset of the financial crisis, the government insured 8,534 commercial banks and savings institutions -- down 52 percent from 1984 -- and as of Tuesday that number was down to 6,926, a 19 percent drop since the crisis began.

From "Forget Too Big to Fail: Some Banks Now Too Small to Succeed"
Los Angeles Times (09/17/13) Reckard, E. Scott

Monday Updates

Mortgages Dwindling

The Mortgage Bankers Association said Wednesday that mortgage applications fell by 13.5 percent in the week ended Sept. 6 from the previous week, reflecting a 20 percent drop in refinancing and a 3 percent decline in purchase loans. Interest rates on 30-year fixed-rate mortgages, meanwhile, rose to 4.8 percent from 4.73 percent during the same time period. Refinancings have taken the biggest hit from the rate jump, and are down 71 percent from a recent peak in May -- their lowest level since June 2009.

From "Home-Loan Ebb Is a Blow to Banks"
Wall Street Journal (09/11/13) Sidel, Robin; Zibel, Alan; Timiraos, Nick




Cordray Tries to Ease Industry Concerns on Mortgage Rules

Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB), said Wednesday that his agency has worked to craft new mortgage-lending rules so they do not exacerbate today's tight lending standards. The agency at the beginning of this year issued an in-depth set of rules to implement a component of the 2010 Dodd-Frank financial law that holds them accountable for ensuring a borrower's ability to repay a mortgage. Cordray said more than 95 percent of the loans written today will meet the CFPB's criteria but implored lenders to continue making loans that fall outside the government's definition.

From "Cordray Tries to Ease Industry Concerns on Mortgage Rules"
Wall Street Journal (09/11/13) Zibel, Alan

FHA Mortgage Insurance Never Goes Away Now

Changes to Mortgage Insurance Premiums

FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent. FHA will increase premiums on jumbo mortgages ($625,500 or larger) by 5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium. These premium increases exclude certain streamline refinance transactions.

FHA will also require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan. Commencing in 2001, FHA cancelled required MIP on loans when the outstanding principal balance reached 78 percent of the original principal balance. However, FHA remains responsible for insuring 100 percent of the outstanding loan balance throughout the entire life of the loan, a term which often extends far beyond the cessation of these MIP payments. FHA’s Office of Risk Management and Regulatory Affairs estimates that the MMI Fund has foregone billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012 because of this automatic cancellation policy. Therefore, FHA will once again collect premiums based upon the unpaid principal balance for the entire period for which FHA is entitled. This will permit FHA to retain significant revenue that is currently being forfeited prematurely.

Loan Size to Be Cut for Fannie, Freddie

The Federal Housing Finance Agency (FHFA) is planning to reduce the maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac, which the agency regulates. The proposed move to cap loans -- FHFA has not yet announced how far it will lower the loan limits, which take effect Jan. 1, 2014 -- is intended to wean the mortgage market off federal support and let the market for non-government-guaranteed mortgages assume a larger role. But critics argue that any such move will shrink the pool of eligible home buyers, thus curbing the country's housing recovery.

From "Loan Size to Be Cut for Fannie, Freddie"
Wall Street Journal (09/08/13) Timiraos, Nick

CFPB May Crush Your Mortgage Hopes, But Will Also Help Your Disputes

CFPB Warns of Crackdown if Credit-Report Errors Aren't Fixed

The Consumer Financial Protection Bureau (CFPB) told financial firms on Wednesday they must improve their responses to disputes about credit reports. The agency said lenders must conduct a thorough review of documents submitted by consumers to contest any mistakes, and report any mistakes to credit-reporting firms. The CFPB said the three largest credit-reporting firms -- Equifax Inc., Experian PLC, and TransUnion LLC -- have improved the dispute process after a previous scolding from the regulator but said other industry players must do more.

From "CFPB Warns of Crackdown if Credit-Report Errors Aren't Fixed"
Wall Street Journal (09/04/13) Zibel, Alan

Will the CFPB ruin your chance for a mortgage?

By Richard Satran | U.S. News – Fri, Aug 30, 2013


Five years after the housing collapse, the new Consumer Financial Protection Bureau is closing the barn door on the loose lending that caused the crisis. But as homebuyers struggle to get financing for new homes, some critics fear the door could be permanently nailed shut for many people seeking affordable housing.

The new lending rules will limit people from taking out a mortgage or refinancing an existing one that puts their overall household borrowing at more than 43 percent of their income. That new debt cap also includes a wide swath of common forms of debt that count toward the total, including student loans, most fees and points related a home purchase, and property taxes. It also tightens rules on documentation, and lenders who improvise to give customers easier terms will be open to consumer lawsuits if the loans go bad.

"It will tighten things further. The largest constraint is the 43 percent threshold," says Sam Khater, senior economist at housing data provider CoreLogic. "It will hit more refinances than purchases because a lot of them use a high debt-to-income ratio. It will also hurt home borrowers in distressed environments."

Mortgage lenders say the rules could make loans especially elusive for some classes of borrowers, even those with strong credit scores. Baby boomers entering retirement and young adults will feel a disproportionate impact because of their lower income levels. (Related on USNews.com: Why Even Rich People Are Having Trouble Getting Mortgages.)

Based on interviews with mortgage lenders, real estate trade groups and market research firms, these groups are most likely to find borrowing more difficult when the rules take effect Jan. 10, 2014:

• First-time homebuyers, especially those who are carrying college loans that count toward the debt limit.

Read the rest here.

Happy Labor Day

St Casimirs will be closed today in honor of Labor Day. Have a safe and pleasant day.

Friday Rate Update

Mortgage Rates Slip Slightly

The average rate for a 30-year fixed-rate mortgage slipped slightly to 4.51 percent from last week’s rate of 4.58 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.59 percent.

New U.S. Rules to Cut Mortgage Risk, Improve Underwriting Process

The Federal Deposit Insurance Corp. (FDIC) today will vote on whether to release for public comment rules requiring lenders and bond issuers to maintain a stake in loans that they bundle and sell as securities, with the exception of low-risk mortgages. The Federal Reserve, the Department of Housing and Urban Development, and three other agencies were required under the Dodd-Frank law to revise the rules and are expected to proffer similar proposals shortly.

From "New U.S. Rules to Cut Mortgage Risk, Improve Underwriting Process"
Reuters (08/28/13) Chadbourn, Margaret

New Home Sales Plummet in July

Sales of new homes fell 13.4 percent in July to a seasonally adjusted annual rate of 394,000, according to the Department of Commerce Friday. Sales were 6.8 percent higher than a year ago. The median new home price rose to $257,200.

--ABA Daily Newsbytes

Small Banks Adjust to CFPB's New Mortgage Rules

The Consumer Financial Protection Bureau (CFPB) on Aug. 15 issued revised examination procedures for mortgages, including rules that govern ability-to-repay standards and qualified mortgages. Small banks, including the $2.1 billion-asset Federal Bank of Tennessee, say the rules are keeping them busy. The CFPB's mortgage rules are complicated and likely will require smaller lenders to make big changes, says an executive with the American Bankers Association.

From "Small Banks Adjust to CFPB's New Mortgage Rules"
American Banker (08/20/13) Peters, Andy



Maryland Goes After Payday Lenders' Banks to Stop Illegal Loans

Maryland's financial regulator is trying to stop illegal online payday loans by going after the banks that help make the loans possible. "Without the payday lender's bank, the payday lender can't operate in my state," said Mark Kaufman, commissioner with the state's division of financial regulation. The institutions are all outside Maryland and the reach of the state regulator, but Kaufman said his office has turned over the names of eight banks to federal regulators in recent months.

From "Maryland Goes After Payday Lenders' Banks to Stop Illegal Loans"
Baltimore Sun (08/19/13) Ambrose, Eileen

More Car Loans Than Mortgages in U.S.

There are now more auto loans than mortgages in the U.S., according to new data from the Federal Reserve Bank of New York. Americans were holding 84 million auto loans in the second quarter of 2013, compared with 80.6 million mortgages, the New York Fed’s Household Debt and Credit Report showed. Borrowing for vehicles reached $814 billion in the second quarter, an increase of $20 billion from the previous quarter. The increase was bigger than any other loan category in the quarter. Most auto loans go to older borrowers, with the greatest share going to people aged 30 to 49. The only group originating more loans than before the recession are people over 60.

From "More Car Loans Than Mortgages in U.S."
Wall Street Journal (08/14/13) Izzo, Phil

Cheat Sheet: The Future of Housing Finance Reform

According to American Banker, President Barack Obama's housing finance reform strategy involves unwinding Fannie Mae and Freddie Mac over several years, and putting private capital at the center of the housing finance market. The plan will also allow the federal government to maintain a limited role in the new system. Obama has outlined four specific principles for reform: keeping a government role in the market; eliminating the possibility of bailouts; preserving products such as the 30-year fixed-rate mortgage; and promoting affordable housing.

From "Cheat Sheet: The Future of Housing Finance Reform"
American Banker (08/09/13) Borak, Donna

Fannie: Consumer Attitudes on Housing Market Improving

Consumer attitudes toward the housing market are increasingly positive despite the recent rise in mortgage interest rates, Fannie Mae reported. Fannie’s July National Housing Survey found that the share of respondents who believe interest rates will go up over the next year increased 5 percentage points to 62 percent, the highest level in the survey’s three-year history.

Consumers also expect home prices to climb an average of 3.9 percent over the next 12 months, holding steady from the May and June surveys. Meanwhile, the share of respondents who said it is a good time to buy a house increased to 74 percent, while the share who said it’s a good time to sell a house increased to 40 percent, matching the survey high.

--ICBA

Survey Finds Some Credit Easing, Stronger Loan Demand

On balance, banks eased credit standards during the last three months as demand for loans rose, according to the Federal Reserve’s July survey of senior loan officers released yesterday. Demand for business and mortgage loans increased, with close to half of respondents reporting moderately stronger demand for commercial real estate lending and a majority of respondents reporting moderate growth in mortgage loan demand.

“Of the domestic respondents that reported having eased either standards or terms on [commercial and industrial] loans over the past three months, all but two cited more-aggressive competition from other banks or nonbank lenders as an important reason for having done so,” the Fed reported. Other reasons cited by large numbers of respondents included a more favorable or less uncertain economic outlook and increased risk tolerance.

In consumer lending, net percentages of respondents reported easing standards on prime mortgages (7.4 percent), car loans (14 percent) and consumer lending such as credit cards (3.7 percent). “Demand for all three types of consumer loans asked about in the survey had reportedly strengthened, on balance, over the second quarter,” the Fed said.

--ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Edge Up

The average rate for a 30-year fixed-rate mortgage edged up slightly to 4.39 percent from last week’s rate of 4.31 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.55 percent.

U.S. Regulators Moving Cautiously on Mortgage Reforms

U.S. bank regulators are carefully crafting various rules to put a stop to reckless underwriting and other mortgage market abuses, claiming they are cognizant of arguments from an alliance of both banks and consumer groups that excessively strict regulations could hinder credit availability. Lenders and consumer groups said the Consumer Financial Protection Bureau (CFPB) struck a balance with its first major mortgage regulations, including a mandate that lenders confirm that borrowers could repay loans; since then, bank lobbyists say CFPB officials remain sensitive to their concerns about rule compliance, and in some cases the bureau has responded to banks' comments by revisiting final rules and changing technical aspects. Lobbyists now are worried that the bureau's modifications could complicate compliance with all of the new rules by the January 2014 effective deadline.

From "U.S. Regulators Moving Cautiously on Mortgage Reforms"
Reuters (07/29/13) Stephenson, Emily

Friday Rate Update

Mortgage Rates Continue Easing Slightly

The average rate for a 30-year fixed-rate mortgage edged down slightly to 4.31 percent from last week’s rate of 4.37 percent, Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.49 percent

New Home Sales Jump in June

Sales of new homes rose 8.3 percent in June to a seasonally adjusted annual rate of 497,000, according to the Department of Commerce. Sales were 38.1 percent higher than a year ago. The median new home price fell to $249,700

Home Sales

Existing Home Sales Slip in June

Existing home sales fell by 1.2 percent in June to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors said yesterday. The decline was due in part to rising interest rates and rising home prices, analysts said. Overall existing home sales are 15.2 percent higher than a year ago and the median price, which rose to $214,200, is 13.5 percent higher than a year ago.


--ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Hold Steady

The average rate for a 30-year fixed-rate mortgage fell slightly to 4.37 percent from last week’s rate of 4.51 percent, holding steady after rising for two weeks. Freddie Mac said yesterday. At this time in 2012, the 30-year FRM rate averaged 3.53 percent

CFPB news

Senate Confirms Cordray Nomination

The U.S. Senate confirmed Richard Cordray to lead the Consumer Financial Protection Bureau as Republicans and Democrats avoided a rule fight that risked gridlock in the chamber. Senators voted 66-34 Tuesday to confirm Cordray more than two years after President Barack Obama nominated him to lead the agency.

From "Senate Confirms Cordray Nomination"
Bloomberg (07/16/13) Hunter, Kathleen ; Litvan, Laura

Community Banks and the New "rules"

ABA, State Associations Urge CFPB to Delay Mortgage Rules


The Consumer Financial Protection Bureau should delay the January 2014 effective dates of several pending mortgage rules, ABA and bankers associations in every state said in a letter yesterday to CFPB Director Richard Cordray.

The rules’ sweeping changes require extra time for lenders to “confidently come into compliance,” the groups wrote. They pointed out that banks have less than six months to comply, and many have only until November, when they lock down their IT systems to deal with year-end regulatory reporting requirements.

The many revisions that the CFPB continues to make “add further burden for lenders trying to come into compliance, in that they require further evaluation, changes to efforts already underway, and additional costs associated with those efforts,” they said.

The groups added that if banks feel rushed in their compliance efforts or otherwise unable to comply, they may withdraw completely from mortgage lending, which “will deprive the communities they serve of local, high-quality mortgage lending and will harm consumers.”

Rate Update

Mortgages Rates Tick Down Slightly

The average rate for a 30-year fixed-rate mortgage fell to 4.29 percent from last week’s two-year high of 4.46 percent, Freddie Mac said Wednesday. At this time in 2012, the 30-year FRM rate averaged 3.62 percent.

Happy 4th!

Have a safe and pleasant 4th!

Update

Mortgage Performance Improves, Foreclosures Drop in First Quarter


Home mortgage performance improved in the first quarter of 2013, the Office of the Comptroller of the Currency said yesterday, with 90.2 percent of mortgages current and performing and seriously delinquent mortgages falling to 4 percent -- 10.4 percent less than a year earlier.

Loans in the foreclosure process at the end of the quarter fell by 28.6 percent year-on-year, the OCC said, and foreclosures initiated during the quarter fell 37.8 percent year-on-year. Foreclosures completed during the quarter fell by 30.9 percent.

The report also covers mortgage modifications, trends for which also indicate returning health in the housing market, analysts said

New Home Sales Edge Up in May


Sales of new homes rose 2.1 percent in May to a seasonally adjusted annual rate of 476,000, according to the Department of Commerce. Sales were 29 percent higher than a year ago. The median new home price was $263,900. Read more.


House Price Index Edges Up in April
U.S. house prices increased 0.7 percent from March to April, according to the Federal Housing Finance Agency’s House Price Index released yesterday. Prices are up 7.4 percent from a year previous, the agency said, but still 11.7 percent below their April 2007 peak. The FHFA's monthly index is calculated using the prices of houses bought with mortgages backed by Fannie Mae and Freddie Mac

Bankers Welcome Rise in Mortgage Rates, If It's Slow and Steady


Mortgage interest backpedaled this week from a 14-month high of 3.98 percent last week, as the average rate on 30-year fixed loans dipped back down to 3.93 percent. The direction is expected to reverse again next week, however, based on the strong likelihood that the Federal Reserve will scale down its bond purchases later in the year. The shift could mean some pain for borrowers and for banks that have been raking in fee income from refinancing loans and selling them on the secondary market. But bankers in general -- and community bankers, in particular -- concur that a slow, steady rise in long-term rates would help normalize conditions. However, "if the 30-year [rate] really spikes a lot, that will have an effect on the real estate market, and it's a fragile market," warns Alex Grinewicz of Columbia Bank in Fair Lawn, N.J.

From "Bankers Welcome Rise in Mortgage Rates, If It's Slow and Steady"
Colorado Springs Gazette (06/20/13)

Mortgage Rates Rise But Still a Bargain

Mortgage rates have topped 4 percent for the first time in about a year, hitting 4.15 percent in the first week of June, reports the Mortgage Bankers Association. The rise represents a 15 percent increase in the cost of borrowing, or about $50 in the average monthly payment on a $192,800 loan -- last month's median price for existing homes. There is concern that rising rates could slow the pace of price and sales gains, but rates would have to move substantially higher to derail the housing recovery. "Rates aren't moving far enough where somebody says, 'I can't get the house I thought I was going to be able to get,'" says Peter Lansing, CEO of Denver-based Universal Lending. Buyers are more concerned about the low supply of homes for sale, which is pushing prices out of their range.

From "Mortgage Rates Rise But Still a Bargain"
Wall Street Journal (06/19/13) P. A4 Timiraos, Nick; Dougherty, Conor

Homebuilders’ sentiment about the market for new single-family homes surged eight points to a 52 reading in June -- the biggest jump since 2002 -- according to the National Association of Home Builders/Wells Fargo Housing Market Index released yesterday. The gain reflected improvement in all three index components -- current sales conditions, sales expectations and traffic of prospective buyers.

“This is the first time the HMI has been above 50 since April 2006, and surpassing this important benchmark reflects the fact that builders are seeing better market conditions as demand for new homes increases,” said NAHB chairman Rick Judson. “With the low inventory of existing homes, an increasing number of buyers are gravitating toward new homes.”

--ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Rise for Sixth Straight Week

The average rate for a 30-year fixed-rate mortgage climbed to 3.98 percent, Freddie Mac said yesterday, rising from 3.91 percent last week and climbing for the sixth straight week. At this time in 2012, the 30-year FRM rate averaged 3.71 percent.

End of Refi Boom Could Trigger Consolidation: U.S. Bank's Aneshansel

Incoming U.S. Bank Home Mortgage President Rick Aneshansel contends that the decline in refinancing will not be compensated by purchase volume, and is likely to spark a wave of consolidation. "If industry volumes are down, the industry has to resize itself," he says. The Mortgage Bankers Association reports that rising interest rates have caused refinance volume to fall from 72 percent of the mortgage market to 68 percent since January. In addition to the expected slowdown in refinancing, banks are still trying to absorb new mortgage regulations from the Consumer Financial Protection Bureau requiring proof of a borrower's ability to repay a loan. "We see continuing [home price] appreciation and as people get right-side up there's an opportunity to grow home equity lending in a responsible way," Aneshansel says. "We believe that will be a growth product in the next few years."

From "End of Refi Boom Could Trigger Consolidation: U.S. Bank's Aneshansel"
American Banker (06/12/13) Berry, Kate

ICBA’s Fine: The Fair Lending Inquisition Is a New Regulatory Low


Conflicting rules on fair lending and “qualified mortgages” might represent a new low in the history of regulatory doublespeak, ICBA President and CEO Cam Fine wrote. In his latest blog post, Fine wrote that new rules from the Department of Housing and Urban Development and Consumer Financial Protection Bureau put lenders in a no-win situation.

HUD’s fair lending rules could expose community banks to disparate impact legal actions if they choose to only make CFPB-approved “qualified mortgage” loans, Fine wrote in Finer Points. This could mean community banks not violate one regulation while trying to comply with another, he wrote.

Instead of burdening community banks with overwhelming and contradictory regulations, Fine wrote, policymakers should encourage their symbiotic relationships with customers and communities.

“How can we promote lending decisions that are not excessively risky but also support loans to homebuyers who aren’t perfect on paper?” Fine wrote. “Well, just off the top of my head, maybe we should support the relationship lenders out there who meet face-to-face with borrowers to determine their qualifications and potential risks.”

Flood Insurance Update

The House last night adopted, by a 281-146 vote, an ABA-supported amendment that would delay for one year some rate increases in the National Flood Insurance Program. Rep. Bill Cassidy (R-La.) offered the amendment during the chamber’s consideration of the Department of Homeland Security appropriations bill.

ABA and its American Bankers Insurance Association subsidiary expressed support for the provision in a letter to Cassidy and all House members earlier this week.

"While both ABA and ABIA remain committed to moving to actuarial rates for flood insurance coverage under the NFIP, we recognize that a greater transition period may be necessary in order to ensure continued affordability for thousands of middle and low income homeowners and small businesses," the groups wrote.

Consumer Watchdog Releases Final Amendment on Ability-to-Pay Rule

The Consumer Financial Protection Bureau has issued amendments to its ability-to-repay rules that would essentially make it easier for small- and medium-sized financial institutions to issue loans while also honoring qualified mortgage requirements. The rules, required by Dodd-Frank, require banks and credit unions to verify borrowers' finances and prohibit so-called no-doc and other risky loans that harmed borrowers in the recent mortgage crisis. The amendments relax some of these requirements for smaller lenders under the QM rule and also readjust how loan origination compensation is tabulated.

From "Consumer Watchdog Releases Final Amendment on Ability-to-Pay Rule"
The Hill (05/29/13) Needham, Vicki

Servicing Goes to India

U.S. banks are outsourcing the labor involved in servicing mortgages and processing foreclosures to Indian companies such as Tata Consultancy Services, Wipro, and others, in cities such as New Delhi and Mumbai. Indian firms will bring in double the revenue from mortgage work this year as in 2009, around $316 million. The outsourced work is comprised of financial verification, such as reviewing borrower's salary and credit history to determine their suitability for a loan, and foreclosure verification, such as reviewing that collection notices were sent on time, that the lender attempted to reduce the monthly payment, and that the borrower was far enough behind to demand foreclosure. The Indian firms do not judge the cases, but prepare all the facts to be decided on by Western decision-makers.

From "Mortgage Jobs Sent to India by U.S. Banks"
Wall Street Journal (05/27/13) Schectman, Joel

St Casimirs Thanks All Veterans For Their Service

Friday Rate Update

Mortgage Rates Keep Rising


The average rate for a 30-year fixed-rate mortgage was 3.59 percent, Freddie Mac reported yesterday. The rate is up slightly from 3.51 percent last week, rising for the third straight week. This time last year, the rate averaged 3.78 percent.

ICBA Urges Legislative Fix for QM Concerns


ICBA continued its campaign for needed reforms to the Consumer Financial Protection Bureau’s “qualified mortgage” rules in a statement for the record for yesterday’s House Financial Services Subcommittee on Financial Institutions and Consumer Credit hearing.

While ICBA is encouraging the CFPB to modify the rule to better protect community bank balloon mortgages, a clean solution is needed, the association wrote in its statement. ICBA wrote that its Plan for Prosperity solution is simple and would preserve the community bank lending model.

The Plan for Prosperity—ICBA’s regulatory relief agenda for the 113th Congress—would provide safe harbor “qualified mortgage” status for community bank loans held in portfolio, including balloon loans in rural and non-rural areas. Community banks that hold loans in portfolio hold 100 percent of the credit risk and have every incentive to work with borrowers to structure the loans properly, ICBA noted in its statement.

ICBA thanked Rep. Blaine Luetkemeyer (R-Mo.) for including in the CLEAR Relief Act (H.R. 1750) a provision that would accord qualified mortgage status to mortgages originated and held in portfolio for at least three years by a lender with less than $10 billion in assets. The association noted that it strongly supports the bill because it contains this provision and other needed regulatory relief measures from the Plan for Prosperity.

The Plan for Prosperity is ICBA’s targeted legislative platform designed to ease excessive, redundant and costly regulations on community banks. Many of the Plan for Prosperity relief measures have been teed up in Congress. Therefore, ICBA is encouraging community bankers nationwide to urge their members of Congress to support the plan and help enact these important measures ---- ICBA

CFPB Cracks Down on Real Estate Kickbacks

The Consumer Financial Protection Bureau is cracking down on real estate kickbacks, ordering Texas homebuilder Paul Taylor to surrender $118,194.20 in funds earned through unlawful referral fees. Through alliances with Benchmark Bank and Willow Bend Mortgage, Taylor founded and jointly owned Stratford Mortgage Service, which advertised itself as a mortgage originator. The CFPB says these entities were in fact "shams designed to allow Taylor to receive the kickbacks." CFPB Director Richard Cordray promises that the bureau "will continue to take action against schemes designed to let service providers profit through unscrupulous and illegal business practices."

From "CFPB Cracks Down on Real Estate Kickbacks"
Reverse Mortgage Daily (05/19/13) Oliva, Jason

Fed Governor: QM May Reduce Credit for Some Homebuyers

Aspects of the ability-to-repay rule and "qualified mortgage" standards may make credit access difficult for homebuyers with low credit scores, including many low-income and first-time homebuyers, Federal Reserve Board Governor Elizabeth Duke said yesterday.

For example, she said, lenders usually compensate for risk by charging higher rates, points and fees. But, she added, "if lenders originate a first-lien QM with an annual percentage rate that is 150 basis points or more above the rate available to the highest-quality borrowers, lenders receive less protection against lawsuits claiming violation of the ability-to-repay and QM rules."

"The extent to which these rules regarding rates, points and fees will damp lender willingness to originate mortgages to borrowers with lower credit scores is still unclear," Duke concluded. "Although I expect housing demand to expand along with the economic recovery, if credit is hard to get, much of that demand may be channeled into rental, rather than owner-occupied, housing."


*******************


Mortgage Rates Edge Up

Mortgage rates edged upward, Freddie Mac said yesterday. The 30-year fixed mortgage rate rose to 3.42 percent from 3.35 percent last week but was still down from 3.83 percent a year ago

Mortgage Lenders Ease Standards for Safest Borrowers

Americans are finding it slightly easier to get a mortgage, yet banks remain wary of lending to would-be home buyers with weaker credit histories. Nearly 10 percent of banks said they eased their lending standards for low-risk mortgages in the first quarter, according to the Federal Reserve's latest survey of senior bank-lending officers released Monday. The report showed more banks easing these standards compared with the less than 5 percent of banks easing prime-mortgage standards in a previous survey in February. Still, banks are focusing most of their lending on borrowers with strong credit histories. Most banks said they weren't any more willing to approve loans to borrowers with credit scores of 680 or 720—middle of the range—than a year ago. Meanwhile, a "modest net fraction" of banks were more likely to approve an application with a higher score of 720 and a 20 percent down payment.

From "Mortgage Lenders Ease Standards for Safest Borrowers"
Wall Street Journal (05/06/13) Shah, Neil


And conflicting news. . .


Fannie, Freddie Limited to QM Loans: FHFA

The Federal Housing Finance Agency announced Monday that Fannie Mae and Freddie Mac must restrict future mortgage purchases to "qualified mortgage" loans. The Consumer Financial Protection Bureau outlined the criteria for such loans in a rule issued in January, which included limitations on fees and points charged and verification of a borrower's income. When the rule goes into effect on Jan. 10 of next year, the FHFA said Fannie and Freddie will only purchase QM loans, effectively barring them from buying interest-only loans or those beyond a 30-year maturity.

From "Fannie, Freddie Limited to QM Loans: FHFA"
American Banker (05/07/13) Blackwell, Rob

Mortgage Rates Edge Lower as 15-Year Sets New Record

The average rate for a 30-year fixed-rate mortgage was 3.35 percent, Freddie Mac reported yesterday. The rate is down slightly from 3.4 percent last week. This time last year, the rate averaged 3.84 percent.

The average rate 15-year fixed-rate mortgage was a record low of 2.56 percent, edging last week’s the previous record 2.63 percent.

BofA Asks Judge to Throw Out Mortgage Suit


Bank of America has asked a federal judge to dismiss a civil lawsuit by federal prosecutors over the quality of home loans sold by its Countrywide Financial unit to Fannie Mae and Freddie Mac in the buildup to the U.S. financial crisis. Federal prosecutors in Manhattan have alleged that Countrywide, facing revenue shortfalls as the subprime mortgage market imploded in early 2007, eliminated checks on loan quality in a streamlining effort known as the "Hustle," while assuring Fannie and Freddie that the loans were quality investments. The U.S. is seeking at least $1 billion in damages. Lawyers for Bank of America, which acquired Countrywide in 2008, argued that the U.S. hadn't sufficiently established that a fraud had occurred and was instead trying to turn a contract dispute into a fraud case.

From "BofA Asks Judge to Throw Out Mortgage Suit"
Wall Street Journal (04/29/13) Bray, Chad

Be Ware of Financial Scams

Bogus Weight-Loss Products, Fraudulent Prizes Top List Of Biggest Scams


By Chris Morran

More than 1-in-10 American adults fall victim to some sort of fraud, according to a new report from the Federal Trade Commission. And scams related to fraudulent weight-loss products are by far the most prevalent.
The FTC has just released a detailed survey [PDF] of consumer fraud in the U.S. for 2011. The agency found that in that year alone, 25.6 million adults (10.8% of the adult population) were victims of fraud. In total, the FTC knows of 37.8 million fraud incidents in 2011, meaning some folks were duped at least twice.

Not surprisingly, the most popular medium for luring in consumers was the Internet, where 1-in-3 victims got hooked into a scam. That’s up from 1-in-5 victims back in the FTC’s most recent survey in 2005. The Internet was also where an even larger percentage — 40% — of all fraudulent purchases made.

---After diet and anti-aging products, the rest of the list:

Here are the rest of the top categories, with the estimated number of incidents in parentheses:
-Unauthorized Billing for Buyers’ Club Memberships (1.9 million)
-Unauthorized Billing for Internet Services (1.9 million)
-Work-at-Home Programs (1.8 million)
-Credit Repair Scams (1.7 million)
-Debt Relief (1.5 million)
-Credit Card Insurance (1.3 million)
-Business Opportunities (1.1 million)
-Mortgage Relief Scams (800,000)



Read the full article at Consumerist.com

Friday Rate Update

Mortgage Rates Edge Lower

The average rate for a 30-year fixed-rate mortgage was 3.41 percent, Freddie Mac reported yesterday. The rate is down slightly from 3.43 percent last week. This time last year, the rate averaged 3.90 percent.

Bankers, Lawmakers Push Back Against Community Bank Regs

Lawmakers joined community bankers on Tuesday to argue that small banks deserve simpler and less restrictive regulations than major financial institutions. In a hearing, the House Financial Services Committee's Financial Institutions and Consumer Credit subcommittee hosted four community bank leaders to hear their complaints and problems in dealing with rules on capital and lending requirements. The bankers, representing their own banks and national groups, claimed that the increased burden of new regulations leads small banks to focus their attention on compliance instead of serving their customer base, and they warned that community banks could be forced to consolidate to stay alive.

From "Bankers, Lawmakers Push Back Against Community Bank Regs"
The Hill (04/16/13) Hattem, Julian

St Casimirs' thoughts and prayers are with the people of Boston.

Keating: Banks of All Sizes Play Key Role in U.S. Economy


Banks of all sizes play a key role in supporting and growing the $16 trillion U.S. economy that is the envy of the world, ABA President and CEO Frank Keating said yesterday in an op-ed piece in The Hill newspaper, a publication widely read by policymakers.

"Thanks to community banks, which typically spearhead development efforts in their towns and make 46 percent of small loans to businesses and farms, Main Streets across the country are surviving and thriving," Keating wrote.

He explained that regional banks project the benefits of community banking onto a larger screen. "Their scale allows them to make bigger loans and help local businesses expand into new communities. They also account for 675 million jobs, $4 trillion in deposits and 43 percent of loans to individuals," Keating said.

He noted that the largest banks, which employ more than 1.2 million Americans, also do all of those things while filling a unique niche. "Their credit capacity and array of financial services support the operations of America’s globally active businesses, which in turn employ 20 percent of U.S. workers," Keating said. He added that large banks also created and operate the modern payments system, which keeps commerce turning.

"Banks of all sizes play a critical role in maintaining and growing the country’s economy, and this banking diversity should be supported by policy, not undermined by it," Keating said.

"That’s worth remembering the next time someone contemplates imposing crushing new compliance burdens on community banks, regulating regional banks as if they were global, or dismantling the nation’s largest banks."


Read more here.

Friday Rate Update

Mortgage Rates Fall


The average interest rate on 30-year, fixed-rate mortgages dropped to 3.54 percent this week from 3.57 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.98 percent.

Mortgage Rates Increase Slightly

The average interest rate on 30-year, fixed-rate mortgages inched up to 3.57 percent this week from 3.54 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.99 percent.

Happy Easter!

Friday Rate Update

Mortgage Rates Fall

The average interest rate on 30-year, fixed-rate mortgages dropped to 3.54 percent this week from 3.63 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 4.08 percent.

ABA’s Chessen Explains Why Cyprus Bank Tax Won’t Happen in U.S.


ABA Chief Economist Jim Chessen explained why a Cyprus-like tax on small-depositor bank accounts wouldn’t happen in the United States during an interview yesterday on Fox Business Network’s “Varney & Co.” program

“The U.S. learned its lesson 80 years ago in the middle of the Depression when there were runs on banks back then, and that’s when they created the FDIC,” Chessen told host Charles Payne. Today, “the FDIC is strong, it is backed fully by the entire banking industry … and the full faith and credit of the United States stands even behind that.”

Chessen noted that the fund insuring customer deposits is now at $25 billion, and that banks are paying $12.5 billion to support it. ---ABA Daily Newsbytes

Happy St Paddy's Day!

Friday Rate Update

Mortgage Rates Rise

The average interest rate on 30-year, fixed-rate mortgages rose to 3.63 percent this week from 3.52 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.92 percent.

Fed's Duke Optimistic About Housing Recovery

The housing recovery is likely to strengthen as the economy improves and triggers pent-up demand, Federal Reserve Governor Elizabeth Duke said Friday at a Mortgage Bankers Association conference in Avon, Colo.

"I am optimistic that the housing recovery will continue to take root and expand," Duke said. "While low mortgage rates are helping support the recovery, I believe it will be the pent-up demand of household formation unleashed by improving economic conditions that will provide real momentum."

She warned, however, that tight credit conditions could slow that impetus. "[T]he strength of this momentum will be determined by credit availability to these new households, an availability that may be much slower to return as mortgage market participants assess the regulatory, market, and economic environment," Duke said.

"I think that if such credit is not readily available, the housing recovery will still continue, but the mix of owner-occupied and rental housing and the level of mortgage originations might be quite different," she explained.

--ABA Daily Newsbytes

Mortgage Rates Edge Up Slightly

The average interest rate on 30-year, fixed-rate mortgages edged up to 3.52 percent this week from 3.51 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.88 percent.

Bill Would Allow Consumers To Get Free Credit Score When Receiving Free Credit Reports
By Chris Morran March 6, 2013


(Alec Peden)
Right now, U.S. consumers can check each of their three credit reports — from TransUnion, Equifax, and Experian — once a year for free through AnnualCreditReport.com, but getting your actual credit score will probably cost you. Legislation introduced today seeks to remedy this issue.

The Fair Access to Credit Scores Act of 2013 [PDF], introduced by Sen. Bernie Sanders of Vermont and Congressman Steve Cohen of Tennessee, looks to amend the Fair Credit Reporting Act to require that when any of the three major credit bureaus provide a customer with his or her free credit report, they also include “a current credit score generated using the scoring algorithm, formula, model, program or mechanism that is most frequently used to generate scores sold to creditors, subject to regulations of the Bureau, along with any information in the consumer’s file at the time of the request concerning credit scores or any other risk scores or predictors relating to the consumer.”


Read more at consumerist.com

Freddie Mac Reports First Annual Profit Since 2006

Freddie Mac earned $4.5 billion in the fourth quarter to finish 2012 with total net income of $11 billion, its first annual profit since 2006, the company reported last week. Officials added that Freddie requested no assistance from the Treasury Department during the fourth quarter, and paid back the agency $7 billion last year.

Overall, Freddie has paid back $23.8 billion -- about one-third of the total taxpayer funds it has received since entering government conservatorship in 2008.

--ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Fall

The average interest rate on 30-year, fixed-rate mortgages fell to 3.51 percent this week from 3.56 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.90 percent.

--ABA Daily Newsbytes

Bipartisan Policy Center Releases Housing Reform Plan

The Bipartisan Policy Center’s Housing Commission yesterday unveiled a plan to wind down Fannie Mae and Freddie Mac and significantly increase private lenders’ participation in mortgage-market financing. ABA President and CEO Frank Keating was a member of the commission and gave the opening remarks at the briefing -- carried live by C-SPAN -- where the plan was unveiled.

The commission’s report “proposes a new housing finance system that calls for a far greater role for the private sector, a continued but limited role for the federal government, the elimination of Fannie … and Freddie … , and reform of the Federal Housing Administration to improve efficiency and avoid crowd-out of private capital,” according to the BPC’s press release.

Under the commission’s plan -- intended to jump-start debate and help build a consensus for change -- banks and other private companies would take the lead in originating mortgages, and also in issuing mortgage-backed securities. Those firms and private insurers would bear the risks of default, except in extreme cases when they are unable to absorb further losses.

In that case, a “public guarantor” funded by premium payments would backstop financing for loans up to $275,000, which is lower than the current $625,500 loan limit Fannie and Freddie currently finance.

“The report is a strong one, which I believe charts a course for a much-needed return of the private market to housing finance. It also states where government involvement is needed it is explicit, paid for, and limited,” Keating said in a statement.

“In the coming months, the commission will continue its important work on housing policy by reaching out to policymakers and key stakeholders and holding forums across the country,” he explained.


---ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Rise

The average interest rate on 30-year, fixed-rate mortgages rose to 3.56 percent this week from 3.53 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.95 percent.

CFPB and the Community Banks

Gauging the impact of new financial regulations on the nation’s community banks is a top priority for regulators, according to testimony from a congressional hearing last week. The FDIC is focused on addressing megabank risks while being sensitive to the regulatory impact on community banks, FDIC Chairman Martin Gruenberg told the Senate Banking Committee.

Comptroller of the Currency Thomas Curry said he has directed OCC staff to look for ways to minimize potential burdens on community banks and to organize and explain the agency’s rulemaking documents to facilitate community bankers’ understanding of how the rules affect their institutions.

Consumer Financial Protection Bureau Director Richard Cordray said the bureau knows community banks might be more likely to retreat from the mortgage market if the new rules are too burdensome. He said the CFPB is working to tailor its rules to encourage small providers to continue providing credit and other services.


---ICBA

Today We Honor our American Presidents

Have a Safe and Happy Valentine's Day!

FTC Study Says 1 in 4 Consumers Had Error in a Credit Report From Major Agency

One in four consumers found an error in a credit report issued by a major agency, according to a study released Monday by the Federal Trade Commission. The study also said that 5 percent of the consumers identified errors in their reports that could lead to them paying more for mortgages, auto loans or other financial products. The study looked at reports for 1,001 consumers issued by the three major agencies — Equifax, Experian and TransUnion. The FTC hired researchers to help consumers identify potential errors.

From "FTC Study Says 1 in 4 Consumers Had Error in a Credit Report From Major Agency"
Associated Press (02/11/13) Wagner, Daniel

--BAI

Friday Rate Update

Mortgage Rates Unchanged

The average interest rate on 30-year, fixed-rate mortgages remained unchanged a 3.53 percent this week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.87 percent

Congratulations World Champions!

Small Lenders Ride U.S. Mortgage Wave as Big Banks Cut Back

Big banks retrenching and cutting back on mortgage lending after the financial crisis have created an opportunity for smaller firms and community banks such as Guaranteed Rate, an independent mortgage lender. The advent of smaller banks is beneficial for customers, and several smaller lenders say reduced costs, low interest rates, and faster processing times permit them to price more aggressively than the larger banks. Small lenders also are leveraging federal guarantees to make home loans geared toward borrowers with low incomes to a greater degree than the big banks.

From "Small Lenders Ride U.S. Mortgage Wave as Big Banks Cut Back"
Reuters (02/04/13) Sussman, Anna Louie


--BAI

Friday Rate Update

Mortgage Rates Rise


The average interest rate on 30-year, fixed-rate mortgages rose to 3.53 percent this week from 3.42 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.87 percent.

---ABA Daily Newbytes

Consumer Confidence Takes a Hit in January

Consumer confidence declined sharply in January and erased all the gains made in 2012, the Conference Board reported. The Consumer Confidence Index dropped from 66.7 to 58.6. The Conference Board said consumers are more pessimistic about the economic outlook and their financial situation and cited the increase in payroll taxes as a contributing factor.


--ICBA

Pending Home Sales Decline

The Pending Home Sales Index fell 4.3 percent to 101.7 in December from 106.3 in November, the National Association of Realtors said yesterday. The index, which reflects contracts but not closings on existing homes, is still 6.9 percent higher than the 95.1 it posted in December 2011.

“The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis,” NAR Chief Economist Lawrence Yun said. “Buyer interest remains solid, as evidenced by a separate Realtor survey which shows that buyer foot traffic is easily outpacing seller traffic.”


---ABA Daily Newsbytes

Friday Rate Update

Mortgage Rates Rise

The average interest rate on 30-year, fixed-rate mortgages rose to 3.42 percent this week from 3.38 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.98 percent.


--ABA Daily Newsbytes

MBA and Member Banks Participate in Culminating Event with the American Red Cross for Hurricane Sandy Disaster Relief

MBA and 17 participating member banks partnered with the American Red Cross over a 6 week period to assist in the response and recovery efforts of those affected by the devastation of Hurricane Sandy. Last week, the culminating event was held at the American Red Cross of the Chesapeake Region headquarters in Baltimore. We concluded the event by presenting the American Red Cross with a check reflective of the total amount contributed by all 17 banks and their communities, which was an incredible amount of $37,132.71.

We owe a special thanks to MBA member Russell Grimes, President & CEO, Carroll Community Bank, who led the initiative to partner with the Red Cross. We also owe a huge thank you to everyone who participated in this important initiative – the participating banks are listed below. As MBA’s Kathleen Murphy stated in the press release, “Support of the relief effort is just another way that the Maryland Banking Industry demonstrates its commitment to giving back.” Again, we greatly appreciate everyone’s generous support!

Participating Banks
Arundel Federal Savings Bank
Baltimore County Savings Bank
Bay-Vanguard FSB
Carroll Community Bank
Fraternity Federal Savings & Loan
Harford Bank
M&T Bank
Monument Bank
OBA Bank
Prince George’s Federal Savings Bank
Sandy Spring Bank
Slavie Federal Savings Bank
St. Casimir’s Savings Bank
SunTrust Bank
The Bank of Glen Burnie
The Columbia Bank
The National Bank of Cambridge

Mortgage Rates Drop Slightly


The average interest rate on 30-year, fixed-rate mortgages edged down to 3.38 percent this week from 3.40 percent last week, Freddie Mac reported yesterday. A year ago, rates for 30-year mortgages averaged 3.88 percent--- ABA Daily Newsbytes

Congratulations Baltimore Ravens!!

St Casimirs will be closed on Monday, January 21 in observance of MLK Day.

Go Ravens!!

FDIC to Consider Rule on Higher-Risk Mortgage Appraisals

The FDIC Board at its meeting today is scheduled to consider a Dodd-Frank Act-mandated final rule that will establish new appraisal requirements for “higher-risk mortgage loans.” The FDIC, along with five other federal financial regulatory agencies, issued the proposed rule last August.  ---ABA Daily Newsbytes

What's being considered is a new requirement that lenders must order and pay for a second appraisal for certain "higher risk/higher cost" mortgages.  Since lenders will have to foot the bill, how long will it be before they just stop offering riskier loans and close many potential borrowers out of the market?

Keating: Final ‘Qualified Mortgage’ Standard Ensures Access to Safe Credit

The “qualified mortgage” standard under the ability-to-repay final rule that the Consumer Financial Protection Bureau issued yesterday ensures that most consumers will continue to have access to safe credit, ABA President and CEO Frank Keating said.

“Qualified mortgage, as defined by the rule, imposes strict lending standards. While QM encompasses many of the loans being underwritten today, it must also interact with a number of other mortgage rules that the CFPB will be issuing this month,” Keating said. “There is a very real impact to these rules, and they will transform our lending practices and could restrict access to credit.”

He commended the bureau for recognizing the need for a safe harbor to prevent a reduction in credit availability and unwarranted lawsuits that ultimately would drive up the cost of loans for consumers.

“We appreciate the thought, time and work the CFPB put into developing this rule. It is clear that the bureau has implemented tough consumer protections with an eye toward limiting market disruptions,” Keating said. “ABA will continue to work with the CFPB to achieve a strong housing recovery.”

The ability-to-repay final rule will take effect on Jan. 10, 2014.
--ABA Daily Newsbytes

Key ‘Qualified Mortgage’ Rule Expected Soon



The Consumer Financial Protection Bureau may release its final ability-to-repay rule, which will include a definition of “qualified mortgage,” in conjunction with a field hearing planned for Thursday, Jan. 10, in Baltimore, according to press reports.

The rule will implement a Dodd-Frank Act requirement that creditors determine a consumer’s ability to repay a mortgage before making a loan. Because it will provide protections for what it defines as qualified mortgages, the rule is expected to have a significant impact on the future of mortgage lending.

ABA and a broad coalition have long advocated that the bureau structure its qualified mortgage as a legal safe harbor that properly shields lenders when they originate compliant loans. They also have urged the CFPB to craft a rule that encompasses a wide range of mortgage products and underwriting practices to protect credit availability. ---ABA Daily Newsbytes