Posts Tagged ‘threshold’

CFPB: Cap Excludes Comp

May 31st, 2013 Comments off

Saying it is too difficult to calculate individual pay early in the origination process, the Consumer Financial Protection Bureau (CFPB) now says loan officer compensation should not be included in the three percent cap threshold under the qualified mortgage rule. However, as nationalmortgagenews informs MHProNews, compensation paid by the creditor to a mortgage broker should be included, and so should fees paid by the consumer to the creditor. “This cap ensures that lenders offering qualified mortgages do not charge excessive points and fees,” says the CFPB. Mortgage Banker Association (MBA) president and chief executive David Stevens, says, “We welcome the stipulation that compensation paid by brokers and lenders to loan originator employees do not count toward the points and fees threshold for what constitutes a qualified mortgage. Both of these provisions should facilitate a more efficient and affordable marketplace for borrowers.” He adds the CFPB is trying to balance consumer protection with access to affordable credit.

(Image credit: hansafx)

Legislative Update—U.S. House of Representatives

May 28th, 2013 Comments off

From the Manufactured Housing Institute (MHI)’s newsletter MHProNews learns Rep. Blaine Luetkemeyer (R-MO), a member of the House Financial Services Committee, has introduced the Community Lending Enhancement and Regulatory Relief Act (CLEAR Act). H. R. 1750 is designed to help smaller financial institutions obtain capital and provide loans to their clients. The newsletter says: “Among the changes included in the bill is an increase from $500 million to $5 billion in the threshold included in the Federal Reserve’s Small Bank Holding Company capital guidelines, relief from escrow requirements, mortgage relief for loans held in portfolio and an increase in the smaller servicer exemption threshold from 5,000 to 20,000 loans.”

(Image credit: Manufactured Housing Institute)

Both Parties in Congress Favor Revising Dodd-Frank

April 24th, 2013 Comments off

MHProNews has learned from the Wall Street Journal there is rare bipartisan support in Congress to roll back a provision in the Dodd-Frank Act that could produce a decline in manufactured home lending, thereby hurting builders, lenders, and owners. A part of Dodd-Frank sets a threshold for interest rates beyond which loans are considered “high cost” by the Consumer Financial Protection Bureau (CFPB) and do not offer legal protections. Many of the loans for manufactured homes fall into this category because they carry interest rates above ten percent, and since purchasers of manufactured homes generally have lower incomes, they are more likely to default. In addition, manufactured homes may lose value over time in some scenarios, and if the home goes into foreclosure the lender will recover less money. Tim Williams, CEO of 21st Mortgage, the largest lender to MH buyers, says a third of his loans from 2010 to 2011 would have landed beyond the CFPB’s threshold. He says the bureau’s restrictions will harm those of modest means in rural areas and will also make it more difficult for individuals to sell their homes. House and Senate lawmakers are working on legislation to make fewer loans “high cost.” Sen. Sherrod Brown (D-OH), noting manufactured homes represent a different consumer base than buyers of traditional homes, says the measure he will introduce would “bring regulations for manufactured housing in line with their place in the market.” Joe Stegmeyer, CEO of Cavco Homes, Inc., the second largest producer of manufactured and modular homes, noting companies are already having tough time, says, “If we see that financing dwindle…it certainly will mean closure of a number of plants.”

(Image credit: bloombergbusinessweek)

MH Industry Insider Perspective: Flash Report on QMs…Not good!

January 11th, 2013 Comments off

An industry insider has provided MHProNews with an exclusive of their flash report on the QM rules issued by CFPB yesterday. There was an 804 page Ability to Repay (“QM”) Rule issued on 1.10.2013 by the Consumer Financial Protection Bureau (CFPB), along with the 431 page High-Cost Mortgage (HOEPA – “predatory Consumer Financial Protection Bureau (CFPB), along with the 431 page High-Cost Mortgage (HOEPA – “predatory loan”) that was also released, so MHProNews must stress that this is preliminary and that expect a more in depth analysis by one or more professionals in a matter of days.

Our source(s) tell us that on the personal property (chattel) lending front: “On the predatory loan rule they gave us nothing. They essentially rebuked, did not believe us or didn’t like the way we lend.”

As examples, here are some select quotes from the CFPB’s rules:

“Moreover, the Bureau is not certain that manufactured home creditors would cease originating loans even if a portion of those loans exceed the high-cost mortgage APR threshold.”

“At the same time, however, industry commenters stated that manufactured home loans typically do not contain the types of loan terms that would be prohibited for high-cost mortgages. In addition, while the pre-loan counseling requirement will entail record
keeping and data retention costs, the Bureau notes that creditors are not required to cover the cost of counseling.”

“In sum, prior to adjusting the APR percentage point threshold for all manufactured home loans, the Bureau would need additional information showing why it is cost prohibitivein today’s market for a manufactured home lender to originate a first-lien, real
property-secured manufactured home (or a personal property-secured loan for greater than $50,000) with an APR of approximately 10.5 percent or less. For all of these reasons, the final rule adopts § 1026.32(a)(1)(i)(A) as proposed.”

MHProNews‘ insider source also commented: “They also used against us the, thank you Uniform Law Commission, recent recommendation for all homes to be magically deemed real property to chastise the majority of our lending practices (meaning)…personal property lending).”

As an example of that, this from the CFPB:

“The Bureau shares commenters’ concerns that a higher percentage-point threshold for personal property-secured loans could, if set too high, exacerbate incentives for creditors to steer consumers into titling their homes as personal property. The Bureau understands that such steering can and does currently occur in the market. Indeed, the National Conference of Commissioners on Uniform State Laws approved in July 2012 a Uniform Manufactured Housing Act that would simplify and streamline State laws to convert manufactured homes titled as personal property to real property and would prohibit manufactured home sellers from steering consumers to chattel loans rather than mortgages.”

These rules will go into effect January 10, 2014. So those manufactured housing lenders impacted, and not all will be, will have time to adjust. The industry as a whole can look to Capitol Hill champions such as Senators Sherrod Brown and Joe Donnelly to help provide a legislative fix.

The manufactured housing industry’s need for grass roots level activism coupled with the need for industry unity has arguably just been heightened.

For those industry professionals who retail homes and use FHA Title II or other mortgage lending products, Homebuilding tells MHProNews from their perspective (that of conventional housing, such as Pulte) that:

QM Preserves The Status Quo On Mortgage Underwriting Standards. Our key takeaway from the QM rule is underwriting standards may not change in the short run because QM provides up to a 7-year grace period for mortgages that meet current GSE and/or FHA underwriting standards. Since the underwriting status quo represents stringent standards for entry-level borrowers due to lender overlays, we do not view QM or the status quo situation as incrementally positive for entry-level buyers or entry-level builders including KBHome (KBH-$16.30:Hold) and D.R. Horton (DHI-$20.81:Hold).
The QM Rule Does Not Move The Federal Government Out Of The Mortgage Business. Another ramification we see from the QM rule is the government mortgage options, GSE & FHA, are likely to remain 90%-plus of new mortgage originations. Since most originators are already following the underwriting standards from the FHA and the GSEs, we do not see a clear business case for changing current standards.

The bottom line is that swift legislative action is needed to protect some personal property lending, while government backed loans like FHA Title II will be more important than ever.

Those coming to the who attend the MH Home lending finance forum on Wednesday January 23 will be able to hear and ask questions from the some 8 lenders expected to be present exactly what loan products you will have available in 2013. See the What People are Saying blog for the show brochure and more details. Expect more news, analysis and commentary on the CFPB’s action here at in the days ahead. ##

(Image Credit: Steve Rhode/Get out of Debt .org – Editor’s note: the image is a joke, and
not the actual logo of the CFPB)

Dodd-Frank Act is No Straight Shot

September 13th, 2012 Comments off

originationnews reports banks under the $10 billion threshold for compliance with the ever-shifting Dodd-Frank Act are unsure of which aspects of the measure apply to them, and are outsourcing because their own IT departments cannot keep track of the provisions that are delayed and/or rewritten. Cashmere Valley Bank in Washington state, with assets of $1.2 billion, has hired a managed compliance service, ATTUS Technologies, to review updates on new rules and current compliance plans regarding mortgage regulatory changes, underwriting standards, and vendor management. The Bank of Marion, in Illinois, with $334 million in assets has turned to Continuity Controls for help with compliance. As MHProNews has learned, Sue Ozburn of Cashmere says, “The legislation brings about many provisions that community banks have to evaluate to determine where they apply. I don’t think Dodd-Frank was intended to apply to every bank, it was more aimed at the larger banks. But we believe the examiners will enforce the law on community banks,” Ozburn says.

(Image credit: Dean Hayes)

MHI Needs Your Support for House Bill

April 10th, 2012 Comments off

In its Week in Review newsletter, the Manufactured Housing Institute (MHI) is urging its members to contact their congressional delegation to support H.R. 3849, legislation introduced by Reps. Stephen Fincher of Tennessee, Joe Donnelly of Indiana, and Gary Miller of California. The Preserving Access to Manufactured Housing Act seeks to rescind provisions of the SAFE Act and the Dodd-Frank Act that hamper access to financing for manufactured homes. The bill addresses two significant issues: Reduce the threshold by which small balance manufactured home personal property loans are considered high-cost mortgage loans under Dodd-Frank; and redefine mortgage originators to exclude those who are selling manufactured homes as being not fundamentally engaged in loan origination, so they can provide technical assistance to consumers throughout the manufactured home-buying process.

(Image credit: Manufactured Housing Institute)

FHA Insurance to Increase

February 29th, 2012 Comments off

HousingWire tells the Federal Housing Administration (FHA) will raise the mortgage insurance from one percent to 1.75 percent to make up for the drop in the Mutual Mortgage Insurance (MMI) Fund below the Congressionally mandated two percent, to 0.2 percent. The FHA said the increase will add $1 billion to the MMI Fund, and combined with the nearly $1 billion coming from settlements with mortgage servicers, should allay fears professed by some analysts that FHA will need a government bailout much like Fannie Mae and Freddie Mac. For loans under the $625,000 limit the annual insurance mortgage premium will increase by ten basis points in April; for loans above that amount the premium will increase by 35 basis points beginning in June. FHA Commissioner Carol Galante, addressing the Mortgage Bankers Association (MBA), said, “These modest increases are one of several measures we are taking towards meeting the Congressionally mandated 2% reserve threshold, while allowing FHA to remain a valuable option for low- to moderate-income borrowers.”

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Boehlert Addresses MHI’s Winter Legislative Session

February 28th, 2012 Comments off

Jason Boehlert, vice president of government relations for the Manufactured Housing Institute (MHI), shown here explaining the landscape of legislative affairs inside the Washington, D.C. beltway at the MHI legislative session government affairs briefing Feb. 25. His presentation included pending legislation that would provide regulatory relief for the manufactured housing industry. The House has bi-partisan support for the legislation but it needs sponsors in the Senate. MHI is urging members and industry stakeholders to contact their congressional representatives to support H.R.3849 that addresses two issues that affect consumers ability to obtain financing for MH: Reducing the threshold by which small balance manufactured home personal property loans are considered High-Cost Mortgage Loans under provisions within Dodd-Frank; and two, clarifying that those selling manufactured homes—who are not fundamentally engaged in the business of originating mortgage loans—are not to be defined as mortgage originators under the SAFE Act.

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