Expect OCC examiners to focus on these three mortgage issues
Expect OCC examiners to focus on these three mortgage issues
Compliance risk continues to top the list of the Office of Comptroller of the Currency’s (OCC) concerns about mortgage lending. In the recent Semiannual Risk Perspective, the OCC encourages mortgage bankers and examiners to be aware of the challenges posed by Home Mortgage Disclosure Act (HMDA) amendments, integrated mortgage disclosures and third-party due diligence.
“This report clues us in on what regulators will be keeping an eye out for over the next year,” said Thomas Cronin, Managing Director of the Collingwood Group, a Situs company. “The mortgage industry should stay on top of these three issues in particular.”
- HMDA Amendments – New HMDA data collection requirements went into effect at the beginning of this year. Although most entities have already rolled out HMDA implementation, the OCC warns that amended requirements may continue to pose challenges to compliance management systems. The Consumer Financial Protection Bureau (CFPB) has said it may re-evaluate certain HMDA requirements under the 2015 rulemaking. While this action could provide regulatory relief, it would also likely require additional change management.
- Integrated Disclosures – The mortgage industry has grappled with the Truth in Lending Act (TILA), Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures (TRID) since they took effect in October 2015. TRID compliance risk was downgraded from a “key risk” to “an issue that warrants monitoring” in the recent report. The OCC notes that mortgage bankers may still be experiencing system and operational difficulties, especially related to accuracy, timing and tolerances. The OCC warns, “Compliance risk management and audit functions are expected to be sufficient to promote ongoing compliance with regulation.” Notably, TRID violations carry the risk of statutory damages and civil liability.
- Third-Party Risk – In trying to tackle regulatory implementation and constant compliance management, the mortgage industry has often turned to the support of third-party providers. The OCC cautions that entities outsourcing compliance activities should conduct “sound due diligence” and “maintain sufficient oversight” of third-party providers. This is hardly new advice for the mortgage industry. However, federal regulators remain focused on oversight of vendor management.
The mortgage industry should expect heightened or, at the very least, continued scrutiny of these three areas of compliance.
“In understanding the OCC’s role and priorities in mortgage oversight, organizations can better anticipate how compliance examinations and overall supervision are likely to evolve in the near term,” Cronin said.
Fannie Mae CEO to step down by end of year
Fannie Mae’s chief executive is slated to leave the mortgage-finance giant by year’s end amid a broader leadership overhaul that would put day-to-day operations in the hands of the company’s current finance chief.
Timothy J. Mayopoulos, a financial-services lawyer who as CEO led the turnaround of Fannie after the financial crisis, would remain chief executive for now and yield the president title to David Benson, Fannie’s chief financial officer.
Meanwhile, Celeste Brown, who joined Fannie last year from Morgan Stanley, was promoted to executive vice president and chief financial officer.
The promotions are effective Aug. 6, Fannie said Monday. Fannie, which has been under government conservatorship since the financial crisis, said it is searching for a new CEO.
“During Tim’s tenure as CEO, Fannie Mae has been profitable on an annual basis, paid the Treasury approximately $167 billion in dividends, and reduced risk to taxpayers,” board Chairman Egbert L.J. Perry said in a statement.
Read more: MarketWatch
New-home sales fall 5.3% in June … a warning light?
Sales of new U.S. homes tumbled 5.3 percent in June and the median sales price also slipped, a potentially ominous sign for the U.S. housing market.
The Commerce Department said Wednesday that newly built homes sold at a seasonally adjusted annual rate of 631,000 last month, less than May’s revised figure of 666,000. The decline follows solid growth in previous months. New-home sales have risen 6.9 percent so far this year, but builders are starting to wrestle with rising costs for lumber. At the same time, mortgage rates are on the rise and wage growth has been meager, squeezing many would-be buyers.
“Weak June new home sales add more evidence that the housing market is flattening, and may have peaked for this expansion,” said Robert Frick, a corporate economist for Navy Federal Credit Union.
Monthly home sales figures can be volatile, but the latest report follows a string of setbacks in the real estate market.
Read more: Miami Herald
States still call the shots on subprime lending
Back in 2008 – when the Consumer Financial Protection Bureau was still a gleam in Elizabeth Warren’s eye – Ohio voters approved a referendum that was supposed to cap interest rates on small-dollar consumer loans at 28%.
The effort quickly went awry, as lenders found a loophole that allowed them to charge annual interest rates of 591%. Now, 10 years later, the state is on the verge of enacting major reform.
On Tuesday, the Ohio House of Representatives passed by a margin of 60 to 24 a bill that would cap payments on 90-day loans at around 7% of the borrower’s net income. The bill has already been passed the state Senate, and consumer advocates are hopeful that Republican Gov. John Kasich will sign it into law.
Read more: American Banker
Overstock.com enters the property management business
Online retail giant Overstock.com is entering the real estate business. The company announced this week that it will begin to manage properties for landlords of single-family rental properties and multifamily housing developments through its newly acquired property management site called Houserie.
“For nearly 20 years, Overstock has connected customers with premium home goods, helping them build their dream homes; now, we look forward to expanding those services in the real estate industry,” Seth Moore, Overstock.com’s senior vice president of strategy, said in a statement. “We’re always finding ways to use our technology to help customers find just what they want for their homes. Adding real estate to the mix was a natural fit for our brand.”
Houserie provides property managers several services for managing single-home properties or multihome complexes, such as tenant screening, communication with renters, organizing resident information, and soon-to-be-launched rent payment management. Houserie was founded in May 2013; the company was purchased by Overstock in February.
Read more: Realtor Magazine
Southern California home sales crash, a warning sign to the nation
Southern California home sales hit the brakes in June, falling to the lowest reading for the month in four years. Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic. The report covers Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties.
Sales fell 1.1 percent compared with May, but the average change from May to June, going back to 1988, is a 6 percent gain.
The weakness was especially apparent in sales of newly built homes, which were 47 percent below the June average. Part of that is that builders are putting up fewer homes, so there is simply less to sell.
“A portion of last month’s year-over-year sales decline reflects one less business day for deals to be recorded compared with June 2017,” noted Andrew LePage, a CoreLogic analyst. “But affordability and inventory constraints are likely the main culprits in last month’s sales slowdown, which applied to all six of the region’s counties and across most of the major price categories.”
Read more: CNBC