Nonbank

Some worry the Senate’s rejection of the OCC rule hampers efforts to clarify legal standards for banks selling loans to fintechs.

Three Republicans joined Senate Democrats in voting to overturn a rule issued by the Office of the Comptroller of the Currency that makes it easier for national banks to sell loans to nonbanks. A companion resolution has been introduced in the House.

The Financial Stability Oversight Council has struggled to find its footing since its creation in Dodd-Frank. The Treasury secretary has signaled a more aggressive role for the panel, including reviving its authority to target nonbank behemoths.

The Financial Stability Oversight Council could determine that a broad range of mortgage companies should be subject to “heightened prudential standards,” said Andrew Olmem, a partner at Mayer Brown and a former senior economic adviser to the White House.

In the waning days of the Trump administration, the agency issued a new legal theory of its power to let national banks evade state consumer protection laws. But some state attorneys general and consumer groups charge the federal regulator is attempting to sidestep restrictions imposed by Dodd-Frank.

The nonbank lender is co-sponsoring a $258.4 million residential mortgage pool comprised entirely of wealthy borrowers with 15-year term contracts.

The agency finalized a rule to determine which party in a loan sale is subject to regulatory requirements. Advocates charged that the move will help predatory lenders.

Minus various expenses including corporate, legal and servicing rights valuation, Ocwen had adjusted pretax income of $13.5 million.

The legislation, which would apply to both banks and nonbanks, would give borrowers the right to sue for damages when servicing violations occur.

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

A proposal to expand consumer protections in the state was added to a budget bill after being dropped in June. Financial institutions say the measure conflicts with federal law and are working behind the scenes to stop it.

The complaint filed by New York, California and Illinois argues that the regulation, issued in response to the 2015 Madden decision, undermines state laws intended to protect consumers.

If it’s approved, the charter is expected to lower the fintech’s cost of funds and allow for more product offerings. It comes nearly three years after SoFi pulled the plug on an earlier effort to open an industrial bank.

Nonbank servicers have been seeking more sources of cash since the coronavirus disrupted markets and elevated forbearance rates. These are some strategies they may be able to use.

The new regulation is intended as a workaround for banks affected by the 2015 decision that created legal uncertainty for loans sold across state lines.

Mortgage lenders have imposed steep pricing adjustments for cash-out refinancing as more borrowers seek forbearance.

The Treasury secretary said recent government moves will help the firms get through the risk of millions of borrowers missing their loan payments.

Lenders that split their sales of loans and servicing between two different investors may be facing yet another challenge due to the coronavirus outbreak.

Mark Calabria needs to be working to secure a Fed facility for servicer advances and to support, not denigrate, smaller servicers, the Mortgage Bankers Association said.

Ocwen Financial has approximately $749 million of liquidity from various sources to deal with servicing issues arising from the coronavirus, a company press release said.