Posts tagged ‘Fannie and Freddie’

Do You Know What URLA Stands For?

Good morning, folks. With the holiday season officially upon us, I figure I have about a week and a half more of your attention before you go on a mental holiday from work through January 3rd. So, in the next few days, I just want to highlight a couple of important deadlines which are quietly creeping up on the banking world. 

Which brings us to today’s headline. URLA stands for the Uniform Residential Loan Application. It is the form used and required by both Fannie and Freddie, on which mortgage loan applications are processed. Given the ubiquity of the GSEs, this means that if your credit union offers mortgage loans, your credit union or vendor uses this form. Just how important is the information on this form? Well, it’s the first step of complying with virtually all mortgage lending regulations ranging from TRID to HMDA. It is also the form Fannie and Freddie use to make underwriting determinations. The bottom line is that it’s a crucial document which is undergoing major changes for the first time in 20 years. 

Many of the changes are long overdue. For example, interactive drop-down boxes make it easier to write down all the necessary information without having to type it out. A lot of these changes are common sensical as we move towards paperless mortgage transactions. 

Now for the bad news. While many of these changes make sense, it means that your mortgage staff, which is responsible for accurately filling out these forms, must be trained and knowledgeable about the new updates. Furthermore, you have to make sure that your systems have integrated the new forms and that all systems are ready to go no later than March 1st. That is the date on which Fannie and Freddie will stop accepting the old forms. 

My hope is that for many of you, this is old news, and I am simply restating the obvious. For those of you for whom work needs to be done, the time is now to make sure your systems are ready to go before you settle your brains for a long winter’s nap. 

November 30, 2020 at 9:22 am 2 comments

FHFA Pushes Back Refinance Fee

In one of the most swift and effective lobbying efforts yours truly has seen, the Federal Housing Finance Agency (FHFA) announced it would delay imposition of a 50 basis point mortgage refinance fee on loans sold to Fannie Mae or Freddie Mac until December 1, 2020.

As I explained in a recent blog, FHFA announced on August 12th that Fannie and Freddie would begin imposing the fee on loans sold to the GSEs starting in September.  Since most loans are locked 45 to 60 days in advance of such sales, this meant that mortgage lenders, including credit unions, would have to pay the fee out of their own pocket.  The industry responded quickly and forcefully to this de-facto tax on mortgage lending.

When the fee does take effect in December it is anticipated that it will result in increasing the cost of refinancing by an average of $1,400.

The fact that the FHFA feels that the fee is necessary is the clearest sign yet that the future is far from bright for mortgage lenders who must begin absorbing the cost of forbearances and delinquencies.


August 26, 2020 at 8:34 am 1 comment

Winter Is Coming. What About Housing Reform?

Image result for winter is comingIt’s that time of year again. It was gray and cold at a neighbor’s party on Saturday. The Giants offensive line is non-existent and housing reform is going through another one of its periodic spasms when Congress and policy makers realize that something has to be done about the structure of our housing system.

Late last week Jeb Hensarling, the retiring chairman of the House Financial Services Committee, released a bipartisan discussion draft/proposal for housing reform. The core of the plan would eliminate the Fannie Mae and Freddie Mac charters and shift much of what they now do to the Government National Mortgage Association. There would also presumably be more conservative standards for securitizing loans and a requirement for more private money to be infused into the secondary market. In addition, you would also see an expanded number of entities authorized to issue government back securities.

Most importantly from a credit union perspective the legislation stipulates that one of its major purposes is to create more opportunities for smaller lenders. It also authorizes the creation of a small lender program which would presumably be a mechanism to ensure that community banks and credit unions continue to get cost-effective access to the secondary housing market.

If you had told me back in 2008 that Fannie and Freddie would still be alive today, I would have told you that you needed to get more sleep. In fact, Chairman Hensarling correctly noted in statements and interviews last week that the country is more, not less dependent on the GSE’s than ever before. As Ed DeMarco pointed out in testimony before the House Financial Committee, Fannie Mae and Freddie Mac have approximately $5.1 trillion mortgage back securities outstanding today which is $750 billion more than they had ten years ago.

Do I think any of this will go anywhere? Not in the near future. But everyone has a point and there is clearly a compromise available if only we would get serious about housing reform. First it makes perfect sense to do all we can to reduce the government’s involvement in the housing market; it distorts prices, gives quasi-government entities an unfair advantage in the securitization market and puts the American tax payer on the hook for the mistakes of others. Second, the existing system is a bureaucratic mess. We don’t need both Fannie and Freddie. Third, we can have a system that is both more responsive to the free market and protects credit unions and community banks by ensuring them continued access to the secondary housing market at fair prices. It’s time to get serious and deal with this issue once and for all. As Game of Throne fans know, winter is coming.

NAFCU Releases Glass Steagall Reform White Papers

Kudos to NAFCU for using the anniversary of the housing crisis to highlight the need for policy makers to impose Glass Steagall like restrictions back on the banking industry. Glass Steagall repeal is one of the reasons why we now have banks that are too big to fail and a financial environment which is choking the oxygen out of all but the largest of institutions. Credit unions do have a stake in this issue and shouldn’t be tepid about saying so.

I’ll be at the Compliance and Legal Conference for the next couple of days. I’ll be blogging again on Thursday.


September 10, 2018 at 9:20 am Leave a comment

7 Things You Need To Know On Friday

Image result for revised ncua sealThere may only be ten days until Christmas but no one bothered telling our regulators this is shaping up as one of the most eventful Decembers since yours truly entered credit union land more than a decade ago. By the way, before I get started, yours truly can now be followed on Twitter @HMeierEsq

Here are some of the highlights:

DFS Fines PHH And Issues Zombie Property Guidance

I like to say that Wells Fargo is the gift that keeps on giving for CFPB supporters but PHH is a close second. Yesterday, New York’s Department of Financial Services fined PHH $119,000 for violating – arguably simply ignoring – New York’s new Zombie Property Regulations which require financial institutions to identify and report vacant and abandoned residential property. I’ll be following up with yet another blog on this subject as the guidance raises compliance issues, but for now let me throw this out there: Even if your credit union is exempt from the maintenance requirements, it is my opinion that you should still follow the procedures for identifying and reporting abandoned property.

Is This Really Necessary?

I don’t know about you but for years I’ve said, “You know what? What NCUA really needs is a new trademark.” So I was ecstatic when I found out earlier this week that Donald Trump became the first President since Richard Nixon – perhaps that should have tipped someone off that this wasn’t necessarily a good idea – to approve a new seal of office for our regulator. The totemic symbol features a shielded eagle with an olive branch in one of its talons and an oak branch in the other. The olive branch we are told represents “peace and prosperity facilitated by the economic growth.” (Perhaps they got this confused with a suggested update to the UN’s look.) The oak branch represents “NCUA’s strength, honor, and longevity in carrying out its mission of promoting confidence in the national system of cooperative credit.” I don’t know about you but I feel more secure already. In all honesty, if I was to see a bird with an oak branch in one talon and olive branch in the other, I would think: Now there’s a bird that can’t make up its mind. Admittedly, I only had one cup of coffee this morning and the cold weather has me in a bad mood but $1.00 spent on this remake is $1.00 too much.

NCUA Approves Amendments To Emergency Merger Regulations

At its last board meeting of the year, NCUA finalized regulations giving itself time to act quicker to preserve the capital of credit unions in danger of insolvency. §208 of the NCUA Act gives the agency broad authority to merge and manage credit unions in danger of insolvency.

Metsger Bluntly Criticizes Medallion CU’s

Earlier this week NCUA Board member Rick Metsger gave the bluntest assessment of the taxi medallion situation and the impact it may have on the Share Insurance Fund I have heard from any NCUA official. “We have known, and warned about, this risk for some time,” Metsger said, “but the bill is about to come due. Unfortunately, a lot of credit unions that followed supervisory guidance and lent prudently will have to pay for losses incurred by a small number of credit unions that gambled on a market that was disrupted and a bubble that burst.”

DOD Issues MLA Guidance

Earlier this week the Department of Defense issued guidance on its regulations implementing the Military Lending Act. I haven’t had a chance to review them yet but anything that makes those regulations easier to understand and implement is a good thing. I have a sneaking suspicion that the application of these regulations remain among the most misunderstood by credit unions.

Does Anyone Want To Take On Fannie and Freddie?

Bloomberg is reporting this morning that Senator Mark Warner of Virginia and retiring Senator Bob Corker of Tennessee are trying to entice potential competitors to Fannie and Freddie into the mortgage securitization market. Remember, the Goldie Locks goal here is to create a system of Fannie and Freddie competitors that don’t make it too expensive for credit unions and small banks to sell to the secondary market. Here’s what the article says about that: “The Corker-Warner plan would attempt to allay that fear by limiting mortgage lenders, including banks, from having more than a minimal stake in any guarantor, according to people familiar with the matter. It would also mandate equal pricing and access to the system for all lenders.”

Death, Taxes, And The Giants

Despite some last minute hurdles, my guess is that by Sunday there will be an agreed upon version of the tax bill. I wonder what will be less painful: watching the Giants’ game or trying to decipher the tax bill?

December 15, 2017 at 9:37 am Leave a comment

Four Reasons the Economy’s In The Crapper And Likely to Stay That Way

This morning’s papers offer fresh reminders of how our political system is increasingly incapable of taking the steps necessary to help the economy get going again. 

First, the Federal Reserve released the minutes of its Open Market Committee Meeting, in which it strongly suggested that there is broad-based support for the Fed to take further action to stimulate the economy.  The problem is, there is only so much more the Fed can do.  I noticed in the minutes that one participant pointed to what is being done in Great Britain, where banks have been forced to lend as a condition for federal funds, but I don’t see that happening here nor do I think it is a particularly good idea. 

Second, the Congressional Budget Office (CBO) released its last report before the election detailing what would happen if the country goes forward with automatic spending cuts and tax increases, which it is on autopilot to do right now if a political consensus can’t be reached before next January.  The bad news is that without addressing these issues, unemployment is projected to rise a full percentage point and the economy will likely slip back into recession.  The bad news is without making tough fiscal choices the economy is headed for its fifth straight year with a budget deficit of over $1 trillion.  Pick your poison.

By the way, on the other side of the Atlantic, it appears that Greece is going to need even more money as it battles through its depression.  This means that a breakup of the Euro or political paralysis in this country hang like swords of Damocles over whatever economic growth we do manage to scratch out.

Remember also how we still have a housing crisis.  Yesterday, Fanny and Freddie released new guidelines for servicers of its mortgage loans, giving servicers more authority to approve short sales not only for people who are delinquent but for those who are likely to be delinquent in the near future.  As part of the guidelines, holders of second mortgages will be offered no more than $6,000 to walk away from their liens.  This sounds like another example of way too little, way too late when it comes to addressing the nation’s housing problems.

Some day this mess will be behind us, but it is awfully hard to see the light at the end of the tunnel.

August 23, 2012 at 7:36 am Leave a comment

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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