Tag Archives: Federal Reserve

In the face of new loan officer compensation rules to take effect on April 1, one trade group is fighting back with threats of legal action against the Federal Reserve Board. The National Association of Independent Housing Professionals (NAIHP) said on its Web site that it has also held several high level meetings with various agencies like the Consumer Financial Protection Bureau and the Financial Crisis Inquiry Commission, and with high powered administrators like Elizabeth Warren.

The latest loan officer survey from the Federal Reserve shows a more positive outlook for certain sectors of the lending industry, but says little improvement is expected in residential real estate this year. Although, about 45 percent of banks responded that they experienced recent growth in their residential mortgage portfolios, despite weakened demand. Around one-third reported having originated a large amount of loans that are not eligible for guarantee by the Federal Housing Administration and cannot be sold to Fannie Mae and Freddie Mac.

The Federal Reserve said this week that it ""does not expect"" to finalize three pending rule changes under TILA that would have mandated new consumer disclosure requirements for mortgage loans. The Fed began crafting the new regulations more than a year ago in response to claims that borrowers did not understand the terms of the loans they were signing. However, rulemaking authority for TILA and jurisdiction over consumer disclosures is scheduled to transfer to the new Consumer Financial Protection Bureau within a few months.

On Monday, January 31, the federal bank, thrift, and credit union regulatory agencies, along with the Farm Credit Administration began accepting federal registrations for licensing under the Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act. Under the SAFE Act, originators of residential mortgage loans employed by banks, savings, associations, credit unions, or Farm Credit System institutions must register with the registry, obtain a unique identifier from the registry and maintain their registrations.

Heeding pleas from industry groups across the country, the Federal Reserve has issued additional guidance to help smaller mortgage lenders and loan brokers comply with new compensation rules that take effect April 1, 2011. Pay structures in which brokers and loan officers are compensated based on the interest rate have been blamed for pushing consumers into unsustainable mortgages and contributing to rising delinquencies. The new rule prohibits this practice to ensure consumers are not steered into loans they can't afford.

The Federal Reserve board held its first meeting of 2011 this week. It may be a new year with new faces around the boardroom table, but there's nothing new in the central bank's policy direction or its assessment of the economic recovery. Board members voted to press forward with plans to buy another $600 billion in securities and to keep the Fed's benchmark interest rate near zero, where it's been for two years now. One distinction did emerge--the vote was unanimous in favor of the policy decision for the first time in 12 months.

The task force assembled by federal banking regulators to investigate the industry's servicing and foreclosure practices after the robo-signing scandal broke is expected to release the results of its findings as early as February. John Walsh, acting head of the Office of the Comptroller of the Currency, says on-site reviews by task force examiners are ""largely complete"" and federal agencies have begun the next phase of formulating actions that should be taken to ""fix problems in the mortgage servicing and foreclosure area.""

Consumer advocacy groups have been joined by federal lawmakers in their campaign against a mortgage lending rule change proposed by the Federal Reserve. The Fed has recommended revising a stipulation that allows homeowners to stop a foreclosure on the grounds that the lender violated disclosure requirements outlined in the Truth-in-Lending Act (TILA). With consumers' rights at the forefront of regulatory reform, the Fed's decision is attracting criticism. A group of senators is calling the proposal ""unfortunate and unnecessary.""

Income and expense data released by the Federal Reserve this week shows the central bank is earning a pretty penny from its investments in mortgage securities. The Fed began buying mortgage bonds from Fannie Mae, Freddie Mac, and Ginnie Mae in November of 2008 to help prop up the nation's deteriorating mortgage markets. In 2009, Fed officials reported that these efforts, combined with its purchases of Treasury securities, yielded a $46.1 billion profit. In 2010, earnings on those investments jumped to $76.2 billion.

The Federal Reserve published its latest edition of the popular Beige Book Wednesday. Based on information received from contacts in the field, the central bank says economic activity across the country ""continued to expand moderately"" during the last part of 2010 with steady improvements seen in labor markets. However, the real estate sector, and residential housing in particular, continues to be a significant hurdle for the economic recovery, with local housing markets characterized as ""sluggish.""