ATR

The new reality for investors and originators accounts for forbearances and ability-to-repay.

First Republic is preparing a private-label residential mortgage-backed securities transaction and could be the first bank to launch this type of deal since the coronavirus first roiled U.S. markets in mid-March.

Two Harbors, a real estate investment trust, sold the bulk of its nonagency mortgage-backed securities portfolio to head off margin calls and refocus on its more favorable agency-MBS investments.

Now that the Consumer Financial Protection Bureau says it will scrap an unpopular standard for so-called qualified mortgages, the big question is what will take its place.

The agency is sending a strong message that it won’t rush to end an exemption for Fannie Mae and Freddie Mac while also signaling longer-term changes that will affect all lenders.

The percentage of recent mortgage borrowers with subprime credit scores still resides in the single digits, but nearly doubled what is was in 2013, according to TransUnion.

Senate Democrats are warning the Consumer Financial Protection Bureau to be careful as it considers changes to its mortgage underwriting rules.

Though advocates and industry are rarely aligned, they are starting to coalesce around a plan that would call for the elimination of the CFPB’s 43% debt-to-income limit as part of its qualified mortgage rule.

The industry has long worried that the ability-to-repay rule gives borrowers an avenue to fight foreclosure, but one plaintiff’s experience may discourage others from trying.

With the agency mulling changes to the “Qualified Mortgage” regulation, mortgage lenders say little-known standards for how they document a borrower’s income would be a good place to start.