Last month involved several regulatory compliance updates and hot topics in the Mortgage industry. We’ve rounded up some key updates and how they will affect you and your financial institution going forward.
Why Have Banks Stepped Back From Mortgage Servicing?
The mortgage industry in the United States changed considerably in the period following the global financial crisis (GFC). Some of these changes were the result of a new host of regulations that stemmed from the Dodd-Frank Wall Street Reform and Consumer Protection Act. This has included the implementation of the Ability-to-Repay/Qualified Mortgage (ATR/QM) rule, which has locked in more conservative underwriting and product features, and national servicing standards, which have formalized many of the loss-mitigation requirements put in place during the unprecedented level of foreclosures. Additionally, bank regulators in the US implemented—and then further refined— the Basel III capital standards, including several provisions that impacted mortgages, particularly mortgage servicing. Furthermore, the federal government pursued and obtained significant financial penalties against mortgage lenders and servicers due to mistakes made during the crisis, including seeking treble damages under the False Claims Act (FCA).
Why Is This Important to Me and My Financial Institution?
The trend of banks moving away from mortgage servicing is expected to continue, and mortgage lenders will continue to fill that space. Coming in November, OnCourse Learning will be releasing an entire series of courses dedicated to helping lenders train employees on the regulations around mortgage servicing.
FinCEN Proposes Amending AML Program Requirements
On September 16th, 2020, FinCEN issued an Advanced Notice of Proposed Rulemaking (ANPRM) to solicit public comment on questions pertaining to potential regulator amendments under the Bank Secrecy Act. The goal is to increase the effectiveness and efficiency of anti-money laundering programs. The potential amendments would make it clear that an “effective and reasonably designed” program is one that:
- Assesses and manages risk as informed by a financial institution’s own assessment process, including consideration of AML priorities to be issued by FinCEN consistent with the proposed amendments.
- Provides for compliance with BSA requirements.
- Provides for the reporting of information with a high degree of usefulness to government authorities.
Comments need to be submitted within 60 days of the publication in the Federal Register.
Why Is This Important to Me and My Financial Institution?
This comment period could assist in not only gaining efficiencies in financial institution AML programs but also strengthen the national AML regime. Comments from all interested parties will help inform the scope of any future regulatory actions.
Fannie, Freddie Take a Close Look at Mortgage Risk as Climate Events Multiply
New research compiled by U.S. government-backed mortgage companies recently shows housing markets are beginning to respond to damages from climate change-fueled floods, storms and disasters.
Fannie Mae and Freddie Mac, whose portfolios underpin half the $16 trillion U.S. mortgage market, recorded changes in home sales prices and an uptick in mortgage defaults among damaged properties in Texas after the destruction caused by 2017’s Hurricane Harvey, a storm whose extreme rainfall scientists say was worsened by climate change.
Why Is This Important to Me and My Financial Institution?
The topic of climate change continues to get attention within the GSE’s as they attempt to assess and mitigate the risks climate susceptible properties pose to their overall portfolios. This is a topic worth keeping tabs on, as the implications of any policies they establish could have significant impact in many parts of the country.
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*For other news, please refer to Industry News through Mortgage HQ!
Mortgage HQ includes industry news and trends from mortgage experts available at your fingertips, as well as daily one-minute videos from Dale Vermillion, one of the foremost leaders in the mortgage industry. Topics include daily market updates, sales tips and motivational videos to keep LOs excelling in their business.
To see a demo that will give you access to valuable training topics like these and more, visit OncourseLearning.com/Mortgage-H-Q.
About the Author
Michael Rhodes
Product Manager at OnCourse Learning
Michael Rhodes is the Product Manager for the mortgage segment at OnCourse Learning. Michael has worked in the financial services industry for 24 years and keeps up to date on mortgage industry hot topics. Michael received his Bachelor of Arts in Business Administration from Carroll University.
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