Mortgage Rate News

One of the issues that many mortgage lenders have with the Senate housing bill is the requirement for a national mortgage licensing system. They feel that it would require too much of them, and place additional costs on consumers. But even as the debate foes on in Congress, many states are quietly taking matters into their own hands, and joining up with a national mortgage licensing system that is already in place.

The American Association of Residential Mortgage Regulators (AARMR), along with the Conference of State Bank Supervisors (CSBS), have been putting together the Nationwide Mortgage Licensing System (NMLS). Right now, there are eight states that use the system to ensure that their mortgage lenders meet certain requiriements:

• Iowa
• Idaho
• New York
• Kentucky
• Rhode Island
• Nebraska
• Massachusetts
• Washington

However, beginning next month, on July first, six more states will be entering the system:

• Mississippi
• Connecticut
• Vermont
• Louisiana
• North Carolina
• New Hampshire

In addition, 40 states have committed to become a part of the national mortgage licensing system. These numbers indicate that maybe it really isn’t necessary for Congress to mandate mortgage licensing. After all, the states appear to be taking some initiative.

Mortgage News Daily reports on the success, so far, of the NMLS program:

“This unprecedented adoption rate is the result of hard work begun several years ago by state regulators as we envisioned a new regulatory framework that would begin to address some of the gaps we experienced in state and federal oversight of the mortgage industry,” said Gavin Gee, Idaho’s Director of Finance and chairman of State Regulatory Registry LLC, the CSBS subsidiary which developed and operates NMLS.

If states continue to step up require a national licensing system, it would be a step in the right direction toward standardizing home mortgage loans. And it would have the added advantage of being administered locally.

What do you think of having a national mortgage licensing program?

Tags: national mortgage licensing, Senate housing bill, home mortgage loans, mortgage loan blog,
mortgage lenders, mortgage news, mortgage system

In March, the two government chartered lenders, Fannie Mae and Freddie Mac, struck a deal with Andrew Cuomo, the New York state attorney general. In the agreement, Fannie Mae and Freddie Mac agreed only to buy home mortgage loans from lenders that met certain standards of appraiser independence.

Now, though, that deal is under fire and has been called into question. The Daily Briefing, from Fortune, reports on the complaints against the agreement:

But John Dugan, the comptroller of the currency, wrote Tuesday in a letter to the companies’ regulator that the new guidelines “violate or conflict with federal law in fundamental respects.” Dugan said the parties involved in the Fannie-Freddie deal - their regulator, the Office of Federal Housing Enterprise Oversight, and the office of New York’s attorney general - have no authority to dictate the internal structures of federally regulated banks. Moreover, Dugan says, the new rules would impose new costs on borrowers while providing no benefits.

At issue is the fact that many mortgage lenders have in-house appraisers, or partner appraisers. There have been lawsuits in the past, and worries continue, that appraisers offer home values that result in more money for the banks that they are affilitated with. The agreement with Fannie Mae and Freddie Mac back in March was designed to put pressure on mortgage lenders to reform their appraisal practices. Since Fannie Mae and Freddie Mac are the largest buyers of home mortgage loans, without their being able to buy certain types of loans, mortgage lenders would be forced to re-evaluate their practices.

Now, though, things may change. There is legislation to amend the housing relief bill in Congress to nullify the agreement made by Fannie Mae and Freddie Mac. This would allow the two government chartered lenders to continue buying home mortgage loans (and refinancing them), regardless of the practices of the banks.

Do you think that Fannie Mae and Freddie Mac should only buy home mortgage loans that meet certain standards?

Tags: mortgage loan blog, mortgage lenders, home mortgage loans, Fannie Mae,Freddie Mac, appraisals, Andrew Cuomo

Even as many Republicans lined up in support of a Senate housing bill, and even as many mortgage lenders withdrew some of their objections to the housing relief bill, the White House is threatening to veto the bill, which is expected to go for a final vote next week. The Financial Times reports on the objections President Bush has to the Senate housing bill:

The White House said it approved of certain provisions, such as a plan to create a new, stricter regulator for Fannie Mae and Freddie Mac, the government-sponsored mortgage companies.

But it was opposed to other elements such as a $4bn allowance for local governments to buy foreclosed properties and the diversion of funds from Fannie Mae and Freddie Mac to pay for up to $300bn in guarantees for mortgages refinanced to reflect lower home values.

This could be a tactic to force increased negotiations, since the bill probably doesn’t have enough support to override a veto, even though it probably has enough Republican support to pass.

Another issue that is surfacing in this whole legislative ordeal is the fact that Senator Chris Dodd, one of the main architects of the bill, is said to have ties to Countrywide Financial. Some mortgage lenders have special programs, and Senator Dodd was made a member of the Countrywide’s VIP program.

Senator Dodd, of course, denies any preferential treatment for mortgage lenders — specifically Countrywide. But some Republicans are raising questions about whether or not the Senate housing bill would be too helpful to mortgage lenders at the expense of taxpayers and consumers. This is leading to questions of having the bill sent back to committee for further scrutiny, and investigation into benefits accorded Senator Dodd as a member of the VIP mortgage program at Countrywide.

In sort of related news, Bank of America is seeing its bid for Countrywide fall rather rapidly.

Tags: Senate housing bill, President Bush housing bill, home mortgage loan, mortgage loan blog,
mortgage lenders, Senator Dodd Countrywide, Bank of America Countrywide