With origination volume highs and moratorium-driven foreclosure lows, 2020 was a year of extremes in the world of mortgage. Below we explore some of the biggest stories of the year that stand to change the lending landscape as we head into 2021.
The first signs of upheaval: Fed cut rates in early March
CARES Act is passed in late March, offering homeowners a lifeline and sending servicers scrambling
Moratoriums on foreclosures and evictions offered some relief to homeowners and tenants. Some called for the government to do
As lockdowns began, some slammed the brakes on certain types of lending
By May, Fannie Mae predicted highest refinancing volume in nearly a decade
Social distancing delays spring selling season, but does it ever bounce back
Housing equity issues come to the fore as social justice protests break out across the country
For its part, the Mortgage Bankers Association’s new chair, Susan Stewart, said the organization
A number of promotions in the industry were also at least partially intended to reflect a shift towards better representation. Fannie Mae
Supreme Court strikes down CFPB leadership structure in June
Many also thought at the time that the ruling would have implications for
FHFA announces refi fee in August, angering lenders
Rocket launches IPO in August, kicking off a spree of lenders going public
While Rocket launched a traditional IPO, many nonbanks that followed the company, chose to go public by merging with special purpose acquisition companies, a process which tends to involve less paperwork and fewer disclosures prior to launch. Check out our
MERS owner Intercontinental Exchange announces it will buy Ellie Mae
HUD finalizes contentious revamp of fair lending rule in September
The original proposal allowed a defendant to rebut a plaintiff's case by citing the use of an algorithm that was “nondiscriminatory.” Because HUD received several comments citing a concern about algorithms, which some fear could make lending discrimination worse instead of better, it removed the specific reference to them as a way to rebut claims.
Some consumer and civil rights advocacy groups acknowledged that the softening of the language around algorithms was welcome, but they remained concerned about remaining language around the use of predictive analysis because it leaves the door open for the use of algorithms in the defense of fair housing and lending claims.
There was a split between larger and small lenders regarding HUD’s amended interpretation of disparate impact, with bigger players, such as the Mortgage Bankers Association and Rock Holdings’ Quicken Loans, suggesting the amendment be put on hold in light of the current national focus on racial equity issues. Smaller lenders, however, maintained that related regulation has been overly burdensome.
Many expect the incoming Biden administration
Freddie Mac prices first-ever credit risk transfer linked to SOFR
“As a member of the Alternative Reference Rates Committee, Freddie Mac has been a leader in the shift from Libor to SOFR,” said Mike Reynolds, vice president, single-family CRT, in a press release. “SOFR has multiple benefits to our CRT investors and Freddie Mac. The transaction volumes underlying SOFR are increasing across different fixed-income products, and now CRT is in that category.”
In November,
CFPB issues a final debt collection rule in October
The CFPB established rules to allow the use of technologies developed after the Fair Debt Collection Practices Act passed in 1977. Consumers can opt out of such modern communications.
The
Biden wins the election … eventually … and names his transition team’s housing experts
The team-lead for review of the Department of Housing and Urban Development, for example, is the vice president and chief innovation officer at the Urban Institute, Erika Poethig. Poethig previously served as an acting assistant secretary for policy, development and research at HUD under the Obama administration from 2012 to 2013. At least one team member has past mortgage industry experience. Helen Kanovsky, who was the general counsel for the Mortgage Bankers Association from 2016 to 2019, is on the Treasury transition team.
FHFA issues final capital rule post-election
CFPB finalizes its overhaul of mortgage underwriting rules in December
The bureau finalized one rule establishing a new general QM standard, which was unchanged from a June proposal. It adopted a pricing threshold to determine if loans can avoid liability under ability-to-repay requirements, replacing the current debt-to-income limit of 43%. The final QM rule would give lenders relief for loans capped at 150 basis points above the prime rate.
In the second final rule, the CFPB determined that a loan can earn the “seasoned” QM label if they are on the lender's balance for at least three years.