Top Story Lending Related

The Federal Housing Finance Agency (FHFA) has released its first report providing information about the sale of non-performing loans (NPLs) by Fannie Mae and Freddie Mac (the Enterprises). The Enterprise Non-Performing Loan Sales Report includes NPL sales data through May 31, 2016 and preliminary outcomes for borrowers through December 31, 2015. NPL sales reduce the number of severely delinquent loans in the Enterprises’ portfolios and the rules are subject to FHFA requirements that encourage NPL buyers to prioritize outcomes for borrowers other than foreclosure.

HUD announced yesterday that it is making a series of enhancements to the Department's Distressed Asset Stabilization Program (DASP) that would have purchasers of severely delinquent mortgages offer qualified borrowers principal reductions and protection from "payment shock." Certain families with distressed mortgages insured by the Federal Housing Administration (FHA) may soon be eligible for a reduction of their outstanding loan amounts should their mortgages be sold through DASP. In addition, FHA's latest enhancements prohibit investors from abandoning low-value properties in high-foreclosure neighborhoods to prevent blight.

The CFPB and the Department of Justice have taken joint action against BancorpSouth Bank for discriminatory mortgage lending practices that harmed African Americans and other minorities. The complaint filed by the CFPB and DOJ alleges that BancorpSouth engaged in numerous discriminatory practices, including illegally redlining in Memphis; denying certain African Americans mortgage loans more often than similarly situated non-Hispanic white applicants; charging African-American customers for certain mortgage loans more than non-Hispanic white borrowers with similar loan qualifications; and implementing an explicitly discriminatory loan denial policy. A consent order, which is subject to court approval, would require BancorpSouth to take a number of remedial measures, and to pay a civil money penalty of $3.03 million to the Bureau. Other outlays to be required by the order bring the combined financial impact on BancorpSouth to more than $10.6 million. See "BancorpSouth pays $10.6 million for mortgage practices," in our Penalties section, for additional information.

The FHFA has announced that several of its indices of new mortgage contracts indicate that nationally, interest rates on conventional purchase-money mortgages decreased from April 2016 to May 2016.

• The National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders Index was 3.70 percent for loans closed in late May, down 5 basis points from April.
• The average interest rate on all mortgage loans was 3.70 percent, down 5 basis points
• The average interest rate on conventional, 30-year, fixed-rate mortgages of $417,000 or less was 3.89 percent, down 5 basis points from April.
• The effective interest rate on all mortgage loans was 3.83 percent in May, down 6 basis points from 3.89 in April. The effective interest rate accounts for the addition of initial fees and charges over the life of the mortgage.
• The average loan amount for all loans was $329,500 in May, up $7,100 from April.

The Federal Housing Finance Agency (FHFA) has issued two documents designed to enhance public awareness of, and involvement in, Fannie Mae and Freddie Mac’s (the Enterprises) credit risk transfer programs. The Single-family Credit Risk Transfer Progress Report provides an overview of how the Enterprises share credit risk with the private sector through primary mortgage insurance and through credit risk transfer transactions and details the status and volume of credit risk transfers through year-end 2015. FHFA also issued a Single-Family Credit Risk Transfer Request for Input (RFI) to assist FHFA and the Enterprises in their ongoing analysis of front-end credit risk transfer transactions in which a portion of the credit risk is transferred prior to Enterprise acquisition of the underlying mortgage.

HUD has announced early findings from the First-Time Homebuyer Education and Counseling Demonstration, a rigorous, large-scale, random assignment study on the benefits that housing education and counseling provides to first-time homebuyers. The initial findings suggest homebuyer education and counseling may lead to favorable results for first-time homebuyers in terms of mortgage literacy and preparedness, homebuyer outcomes, and loan performance. Between September 2013 and January 2016, HUD enrolled a diverse sample of more than 5,800 prospective first-time homebuyers across 28 metro areas. The study involves three large national lenders, 63 HUD-approved housing counseling agencies, and two remote service providers. The preliminary findings include:

• Improved mortgage literacy
• Greater appreciation for communication with lenders
• Improved underwriting qualifications
• No evidence of improved budgeting practices

The Financial Stability Oversight Council (FSOC) has announced it has voted to rescind its determination that material financial distress at GE Capital Global Holdings, LLC (GE Capital) could pose a threat to U.S. financial stability and that GE Capital should be subject to supervision by the Board of Governors of the Federal Reserve System and enhanced prudential standards. The Council unanimously determined that GE Capital no longer meets the standards for a determination, with one member recused.

The CFPB has released its monthly complaint snapshot, this month highlighting complaints about consumer loans, including vehicle loans and leases, installment loans, title loans, and pawn loans. The report shows that consumers continue to complain about issues managing their loans and problems they encounter when they are unable to pay them off. This month’s report also highlights trends seen in complaints coming from Arkansas.

The Bureau also posted an article, “Consumer Voices on Auto Financing,” discussing the challenges faced by consumers in understanding auto loans. The article is the fourth post in the CFPB blog series on auto loans.

The FDIC has issued FIL-41-2016 as guidance to help financial institutions and to facilitate recovery in areas of West Virginia affected by severe storms, flooding, landslides, and mudslides.

The FDIC has announced the launch of a survey of banks on their small business lending practices. The web-based survey of roughly 2,000 randomly selected FDIC-insured banks will begin in late June and will be administered by the U.S. Census Bureau on behalf of the FDIC. The Small Business Lending Survey (SBLS) will collect data that provide additional insight into many aspects of small business lending, including nationally representative information on the general characteristics of banks' small business borrowers, the types of credit offered to small businesses, and the relative importance of commercial lending for banks of different sizes and business models. Institutions chosen to participate in the SBLS will be contacted by letter at the end of June with directions on how to proceed.