MHI Week In Review — January 10, 2014

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MHI News

MHI’s Financial Services and CFPB Updates

CFPB Publishes Updated Mortgage Rules Readiness Guide

In anticipation of mortgage finance rules that go into effect January 10th, the CFPB has released an updated mortgage rules readiness guide to help financial institutions come into and maintain compliance with the new mortgage rules finalized by the agency in 2013. Click here to view the guide. The agency has also released additional resources for consumers, which are available by clicking here.

CFPB Updates Rural and Underserved Counties List

Earlier this month, the CFPB released a new list of rural and underserved counties. The list was released following a final rule in September that made it easier for certain small creditors to continue qualifying for an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans. Creditors will be able to qualify for the exemption in 2014 if they operated predominantly in rural and underserved areas in 2011, 2012 or 2013. Click here to view the list.

CFPB Seeking Information on Mortgage Closing Process

On January 3rd, the CFPB unveiled a Request for Information regarding the mortgage closing process. According to the Bureau, it seeks information on key consumer ‘‘pain points’’ associated with mortgage closings and how these issues might be addressed by market innovations and technology. According to the CFPB, the request is part of the next phase of its Know Before You Oweinitiative, which aims to identify ways to improve the mortgage closing process for consumers.

Comments to the agency are due by February 7th. Federal register:vol. 79, no. 2:friday, january 3, 2014:notices for more information.

Webinar: Lending Outside of the QM Safe Harbor Provision

On January 15th, Jones-Day will host a free webinar on lending practices outside of the CFPB’s Qualified Mortgage (QM) Safe Harbor provision. The webinar will explore key business and legal risks, as well as opportunities for lending outside the QM safe harbor.

For more information, visit the Jones-Day Web site by clicking here

Watt Sworn in as FHFA Director

On January 6th, former Rep. Mel Watt (D-NC) was officially sworn in as Director of the Federal Housing Finance Agency (FHFA), the regulator of taxpayer-owned mortgage companies Fannie Mae and Freddie Mac.

Watt replaces former acting Director Ed DeMarco and will face some key policy decisions in the near term, such as establishing what fees Fannie and Freddie will charge to guarantee home loans and limits on the size of mortgages the companies can finance this year, as well as the possible expansion of some federal programs to help underwater borrowers.

In his position, Watt likely will be tasked with overseeing the longer-term transition to a new housing finance system if Congress enacts legislation determining the fate of Fannie and Freddie. In the past, Watt has opposed some manufactured home lending practices. But, he has also been a firm advocate of requiring the GSEs to expand secondary market finance opportunities for manufactured home loans.

CFPB to Consider Expanding Small Lender QM Exemption

The CFPB could consider expanding exemptions for small lenders from its QM rule that goes into effect on January 10th. In comments made by CFPB Director Richard Cordray during a discussion hosted by the National Association of Realtors on January 7th, he said the CFPB attempted to carefully craft the exemption to avoid burdening smaller lenders, but was open to adjustments once the agency sees the rule’s impact.

Under the QM rule finalized last year, lenders with less than $2 billion of assets that make 500 mortgages or fewer per year are exempt from certain parts of the QM rule, including the debt-to-income (DTI) ratio requirement if they hold the mortgages in their portfolios. There has been a push by many industry groups to expand this exemption to a large cross-section of lenders. It is expected that many manufactured home loans will exceed the 43% DTI threshold of the QM standard.

November 2013 Shipments and Preliminary Year-end Analysis

In November 2013, the industry shipped 4,929 new homes which represents a 13.2% increase against November 2012. Cumulatively, industry results through November 2013 show 56,197 homes shipped which is a 9.4% increase against the prior year.

Between individual business cycles, weather, and holidays, the fourth quarter of the calendar typically produces lower shipment volumes. Month-to-month declines in the fourth quarter are common and November 2013 shipments were down 19% compared to October’s shipment of 6,086 homes. It’s worth noting that October’s result was the single highest monthly shipment number since September 2008 which contributed to the higher than average month-to-month decline.

Since industry results are reported on a forty-five day delay, final 2013 results will not be available for several more weeks. No matter what the shipment numbers for December, the approximately 56,200 homes shipped thus far in 2013 represents two important milestones. First, the year 2013 will represent the third consecutive year of growth versus the prior year. Secondly, while we all want even better growth, the year 2013 will have the highest shipment number since 2008.

Over the last three years, the month-to-month change from November to December has been about a 20% decline but 2013 will represent renewed growth in the industry. MHI’s Monthly Economic Report is scheduled for release on Monday, January 13th.

MHI’s Rick Robinson Interviewed by

For the full text of this insightful interview of Rick Robinson, MHI’s Vice President of Government Affairs and General Counsel, please click here.


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