Groups Ask Congress for "Breathing Room" on TRID

There was an unusual degree of consensus at a Congressional hearing on implementation of the new Truth-in-Lending (TILA) and RESPA Integrated Disclosure Rule (TRID).  All four individuals testifying on behalf of different housing industry interests overwhelmingly agreed that, while implementation of TRID should continue as scheduled on August 1, there should be a grace period for enforcement.

TRID was developed over several years and several incarnations by the Consumer Financial Protection Bureau (CFPB), and while each witnesses at the House Financial Services subcommittee hearing were generally complementary of the agency's work, all encouraged the committee to insist that a five month "hold harmless" period be put in place and that CFPB should not begin enforcement of the TRID rule until January 1, 2016. 

Read more... Groups Ask Congress for "Breathing Room" on TRID

Applications for new home purchases ticked up in April

Mortgage applications for new home purchases increased by 0.3% relative to the previous month, the Mortgage Bankers Association Builder Application Survey data for April 2015 shows.

This change does not include any adjustment for typical seasonal patterns.

Read more... http://www.housingwire.com/articles/33907?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+housingwire%2FuOVI+%28HousingWire%29

Lenders, Homeowner Advocates Unite Behind Mortgage Debt Relief Act

The Center for Responsible Lending, a nonprofit group dedicated to protecting homeownership, and the Financial Services Roundtable, a group of representatives from the nation's largest financial institutions, have come together to ask Congress to extend the Mortgage Forgiveness Debt Relief Act, which will otherwise expire at the end of this year.  Read more:  http://www.dsnews.com/articles/lenders-and-homeowner-advocates-unite-in-support-of-extending-mortgage-debt-forgiveness-act-2012-12-03

Real-estate expert sees disconnect in lending

Arizona State University professor and real-estate development veteran Mark Stapp sees a troubling disconnect between local efforts to build sustainable communities and the globalized mechanisms through which those efforts are funded.
The Phoenix-area commercial real-estate market's problems, which include but are not limited to $3.5 billion of securitized commercial mortgage loans currently in default, are largely the result of that disconnect, he said.

Stapp, still active as a developer, is executive director of the Master of Real Estate Development program at ASU's W. P. Carey School of Business.

He said communities need to get away from relying on massive, corporate lending institutions to fund the development of local real-estate projects. In other words, go back to the way things used to work: local investors funding local development.

Stapp explained the problem this way:

"Real estate is location-specific, unique and small, which makes it really hard to trade and value on a significant scale. Still, the financial world took properties with fundamental differences and bundled them together, in order to create a larger scale, offset transaction costs and trade a bunch of properties together (as commercial mortgage-backed securities)."

Each pool of disparate real-estate assets then was assigned a single investment rating, Stapp said.

"This overlooked the nuances of the individual properties," he said.

Stapp said it's not too late for areas such as metro Phoenix to turn back the clock by setting up local real-estate funds that would finance local development on a project-by-project basis. Everyone involved would benefit, he said, because investors would have more control over where their money was being spent, and developers would know that a project was being financed on its merits, not some financial algorithm devised hundreds of miles away.

by J. Craig Anderson The Arizona Republic Jul. 31, 2011 12:00 AM




Real-estate expert sees disconnect in lending

Lenders must give details on credit denials

Consumers who get turned down for credit cards, mortgages or other loans, or who can't qualify for the best interest rates, already can get a free credit report as part of the rejection process.

Starting Thursday, they will receive their credit score and more detailed explanations, assuming credit scores were used in the lending decision. Rules to be enforced by the new federal Consumer Financial Protection Bureau will add transparency to the credit process.

Consumers who are turned down for a loan, or who get approved on terms materially less favorable than those offered most other customers, will find out why. Lenders will need to provide an explanation, typically citing up to four key factors, and they'll need to provide the person's credit score for free. They must cite which credit score was used and information about it.

Loan applicants who get credit at favorable rates won't get a free credit score.

By getting their credit score after a rejection, consumers should have a better idea about why they got turned down or failed to receive a favorable offer.

Credit scores are based on data compiled in credit reports, so it's wise to review those for accuracy. For free reports, go to annualcreditreport.com. The best way to boost scores is by paying bills on time and managing accounts prudently. Other tips include: limiting new credit applications, keeping older accounts open and maintaining actual credit-card balances at no more than 30 percent of your available credit.

Thursday marks another milestone: the starting date of large-bank regulation by the CFPB. The agency will monitor consumer-financial practices at more than 100 of the nation's biggest institutions.

by Russ Wiles The Arizona Republic Jul. 19, 2011 05:00 PM




Lenders must give details on credit denials

Expanding a financing Facebook for lenders « HousingWire

Martin Goodman (pictured top) and Robert Hodes (pictured bottom) are expanding their online business that puts lenders and investors directly in touch with one another.

The goal, according to the president/founder and director of institutional accounts, is to streamline that process and return liquidity to the market for loan sales and purchases.

With almost 9,000 members, San Diego-based LoanMLS is almost exactly what it sounds like — a marketplace of professionals to list their assets and connect with interested parties.

Goodman and Hodes sat down with HousingWire for this edition of In This Corner to explain how this technology could reshape the face of mortgage lending.

HousingWire: Please explain this online exchange concept. It sounds a little bit like a forum.

Robert Hodes: The way that we operate is really from an arms-length. What we do is give people the opportunity to connect people that have individual notes or pools of notes they would like to sell. They have the opportunity to post those on the site. The members on the site are able to see the listings that have been posted. And if they're interested in the listing based on what they see, they can make an inquiry directly to the entity that posted the listing. And that's how the conversation begins.

HW: You're running your whole business online. Where do you see the mortgage finance industry headed relative to online usage?

Martin Goodman: In the old model a lot of people got a warehouse line and then they would have different people they send their loans through, different channels. And they'd almost table fund deals so they could put it on their warehouse line and then service it for a month then figure out who to sell it to. This model you're almost creating the channel tailored for the specific loans. You can either completely bypass the channel and go directly to an investor, which many of our clients do, or you can work with other brokers and create participating loans. It's creating a new animal if you would, a new product that's really a new way to finance loans.

HW: What are the biggest changes you're seeing in the functionality of the industry as a whole because of this type online capability?

MG: There are many parallels between this system and the Realtor MLS system. Before, agents used to have things in little books and the Realtors didn't talk to each other much, but now there's a true market for homes. While you might not get the price you want, I don't think anybody doubts they can put their home "on the market" and sell it. But the same is not true with loans. Loans have typically been transacted either in very large pools to hedge funds or large commercial buyers, or on a buddy system, a little black book that's still in use today — I'll take your pool and send it out to a handful of people. It's just terribly inefficient. So this creates almost the Facebook of lenders. The lenders are able to get on, interact with each other and create their own market.

There's huge disparity between private money financing and traditional bank financing. If you want to get a commercial loan on an office building in today's market maybe you'll pay 5% to 6%. But if you have the same credit and just step outside and say "I want to privately finance this either with a company that provides private financing or individuals that do private financing," you're looking at 9% to 11%. And the reason for that is a lack of liquidity in the loan.

HW: What do you think an online exchange such as this one could mean for securitization in the future?

RH: The short answer is yes securitization could be done. Let's say for a second there's a given entity that is licensed in all the states and they need a platform to be able to run their notes through, this can be completely setup to bear their name. It can be put on their site as a widget, and things like that. But that is going to depend on the need of the individual entity.

MG: We're about to see an increase in the number of private lenders again. And I don't know that it will impact necessarily securitization, but I think lenders might find they have an avenue that doesn't involve securitization. Before the name of the game was: "We have to do enough volume, we have to have a warehouse line big enough to put all the loans out there to aggregate them so that we can securitize them." With LoanMLS you don't have that issue because if you can find all your investors before you fund the loans, you already have the funds committed. That doesn’t mean we're going to replace securitization.

HW: Where would you say the majority of demand is? What is a hot buy right now?

MG: Right now anything that's discounted that gives a higher than 12% yield to maturity, you can't keep it on the shelf if it's decent. Investors are hungry for yield. Where else are you going to get that kind of yield?

by Christine Ricciardi HousingWire April 22, 2011

Expanding a financing Facebook for lenders « HousingWire

Loan Officer Survey Offers No Surprises. Credit Standards Still Tight

Credit appears to be slowly loosening according to the July Senior Loan Officer Opinion Survey on Bank Lending Practices conducted by the Federal Reserve. The change, however, is modest and concentrated on large banks lending in categories particularly affected by competitive pressures. The Fed defines large banks as those with more than $50 billion in assets and small banks as those with annual sales under $50 million. Fifty-seven domestic banks and 23 US branches of foreign banks responded to the quarterly survey.

Loosening of lending requirements was most pronounced in the area of commercial and industrial (C&I) loans. Residential lending was only modestly improved, with nearly as many banks reporting they had tightened credit as had loosened it.

A total of 55 banks, 29 of them defined as large, the remainder as "other" responded to questions about residential lending. 48 banks or 87.3 percent said that their credit standards for prime residential mortgages had remained basically unchanged over the previous three months. Five banks, all of them large, said their standards had eased somewhat while a total of four - two large and two other - reported somewhat tightened credit.

When questioned about standards for non-traditional mortgages, that is interest only, option ARM, and Alt-A products, 33 banks responded that they did not do such lending. Of the remaining 22 banks, one large bank reported an easing of credit while two banks said that lending standards had tightened. Too few responding banks did subprime lending to permit characterization of the responses. As most housing professionals are aware, non-agency lending is essentially frozen and the GSEs and Ginnie Mae are the primary source of mortgage funding.

Nearly 4 percent of lenders, all smaller banks, reported that the recent demand for mortgages was substantially stronger while 34.5 percent of all banks said demand was moderately stronger. Approximately 30 percent of banks reported a moderately or substantially weaker demand. The lenders reporting weaker demand were primarily larger banks. The increase in demand was moderately stronger for non-traditional loans in 22 percent of banks, moderately weaker in 18 percent. Substantially weaker demand for these loans was reported by only one large bank.

Of the 56 banks reporting that they had written revolving home equity loans in the previous three months, 92.9 percent said their lending standards were basically unchanged. Three large banks and one other reported a slight easing of standards during that period. Demand for the loans was said to be about the same by 73 percent of the banks with the remainder almost evenly divided between those that reported a moderately or substantially stronger demand and those that reported demand was moderately or substantially weaker.

Respondents reported having eased standards and most terms on C&I loans to firms of all sizes but this was the first Senior Loan Officer Survey since late 2006 that showed an easing of C&I credit to small firms. There was also a significant fraction of banks that reported easing pricing on these loans to businesses of all sizes and the banks pointed to increased competition in the market for those loans as an important factor in those changes.

The net percentage of banks that reported a willingness to make consumer installment loans also increased as well as reports of an easing of standards for consumer loans other than credit cards. Terms of those loans remained roughly unchanged. While a small percentage of large banks reported an increase in demand for consumer loans, it was offset by a slightly larger percentage of other banks that reported a decreased demand.

A few banks reported that they had eased standards for credit cards but a small net fraction indicated that they had tightened both terms and conditions and a small net fraction reported reducing credit lines for existing customers.

by Jann Swanson Mortgage News Daily August 18, 2010

Loan Officer Survey Offers No Surprises. Credit Standards Still Tight

Banks Ease Small Business Lending Standards : NPR

Banks have eased lending standards for small businesses for the first time in nearly four years, the Federal Reserve said Monday. Separately, financial firms said consumers continue to better manage their credit card payments, with fewer customers defaulting or making late payments.

In its new survey of bank lending practices, the Fed found that the loosening of loan standards was occurring primarily at the country's largest domestic banks.

Banks had been reporting relaxed credit standards for big corporations. But the new survey marked the first indication that credit was beginning to ease for smaller companies.

That could be welcome news for small businesses. Many have complained since the recession hit that they were having more trouble borrowing money to keep operating.

The Fed said it was the first time it had found relaxed lending standards being imposed on small businesses since late 2006. The Fed defined small firms as those with annual sales of less than $50 million.

The Fed's latest quarterly report on lending was based on responses received to a survey done in late July. It found that the most improvement came in loan areas where banks were facing competition to offer credit.

The survey found that the easing of standards was concentrated at large domestic banks. Most banks were still reporting lackluster demand for credit.

In addition to easier terms for business loans, many large banks also reported having eased standards on various types of consumer loans.

Some large banks reported that they had loosened standards for prime mortgage loans. The banks also reported an increased willingness to make consumer installment loans. A smaller proportion of banks reported that they had eased lending standards on both credit card and other types of consumer loans.

The Fed held a conference on the problem of tight credit to small businesses last month. Federal Reserve Chairman Ben Bernanke noted a serious gap between large corporations who are building up cash and reporting strong earnings and the thousands of small businesses who are struggling to get credit.

Bernanke said banking regulators were applying pressure to get more credit flowing to small businesses, who hire more than half of American workers.

"Making credit accessible to sound small businesses is crucial to our economic recovery," Bernanke had said at the July 12 conference.

More Credit Card Payments On Time

On-time payments have been on an upward trend over the last several months for many major card issuers.

Discover Financial Services, Capital One Financial Corp., JPMorgan Chase & Co. and Bank of America Corp. on Monday all reported declines in July charge-off rates — those unpaid balances they have given up on collecting.

Capital One's improvement led the group, with its net U.S. card charge-offs falling to 8.1 percent of total balances in July from 9.3 percent in June.

Card companies typically write off loans after they're 180 days past due, the point at which it's assumed the balances won't be collected.

by The Associated Press August 16, 2010

Banks Ease Small Business Lending Standards : NPR

China to curb lending binge

by Jeremiah Marquez - Jan. 21, 2010 12:00 AM
Associated Press
HONG KONG - China will slow its massive lending spree and step up monitoring of banks as it tries to prevent speculative bubbles in real estate and other assets while keeping the country's economic recovery on track, a top regulator said Wednesday.

China's banking system is healthy despite last year's explosive growth in credit, and regulators can manage the risks, said Liu Mingkang, chairman of the Chinese Banking Regulatory Commission.

"We are confident that risks envisaged could be well absorbed," Liu said at a financial forum in Hong Kong.

While China was also hit by the worldwide downturn, it has bounced back faster than economies elsewhere. Beijing hopes cooling the pace of lending will keep its economy growing without creating inflation and overheating. Other nations are counting on that growth and a healthy demand for their goods for their own recoveries.

Record bank lending in 2009 to support government spending on infrastructure and other projects under Beijing's stimulus package has led to fears of asset bubbles and huge bank losses if too many loans sour.

After handing out some 9.5 trillion yuan ($1.39 trillion) in loans last year, banks were expected to scale back lending to roughly 7.5 trillion ($1.09 trillion) in 2010, Liu said.

The total amount of loans will grow by as much as 18 percent in 2010 year over year, compared with nearly 32 percent in 2009, he said.

"We shall control, and we have controlled, the credit growth the whole year round," Liu said. "This year we will continue to control the pace and amount of the credit supply."

Already, "corrective actions" have been taken against banks that lent too much or made bad loans to root out "excessive" exposure, consumer credit-card risks and other problems, he said.

Regulators are paying special attention to loans for local government projects and real estate. All banks have been ordered to "heighten their vigilance against an impossible, embedded credit risk," Liu said. New leverage and liquidity restrictions would be imposed, he added.

This month the government tightened restrictions to help curb riskier lending, dampen rising asset prices and ensure banks have enough money to handle losses.
Major banks were ordered to increase their reserve ratios by 0.5 percentage point to 16 percent. The central bank also raised interest rates on one-year bills, to help soak up extra money in the system. The Obama administration has cautioned other countries not to withdraw their stimulus aid until a global recovery is firmly in place. But private economists said Beijing's action was wise, given the surge in Chinese lending, which could lead to a real-estate bubble.

By most measures, Chinese banks are among the world's healthiest at the moment. Not only are they flush with cash, but their bad loans, known as non-performing loans, stand at just 1.6 percent.

With China's economic growth pegged at a blistering 8 percent after a torrent of lending, banks will see a rise in bad loans in the coming years, though losses are expected to be manageable, said Alistair Scarff, head of Asia financial institutions research for Bank of America Merrill Lynch in Hong Kong.

Smaller commercial banks in China's cities are likely more at risk than are the country's heavyweight institutions, he said. At the same time, China's modern banking system has yet to be fully tested.