home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map

twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.

Mortgage Market Liquidity Proposals

FDIC Chairman Bair testifies before Senate

June 6, 2008

By MortgageDaily.com staff

A banking regulator has warned Congress that the mortgage market will get worse before it gets better and offered proposals that can help improve the situation.

The comments were made yesterday before the U.S. Senate's Committee on Banking, Housing and Urban Affairs yesterday by Sheila C. Bair, chairman of the Federal Deposit Insurance Corporation, according to a transcript of her prepared testimony.

"Problems surrounding unaffordable mortgages are acute in today's environment," Bair said. "I believe things may get worse before they get better."

She described the use of covered bonds, where banks issue general obligation bonds that are secured by a pledge of loans that remain on the bank's balance sheet.

"Proponents argue that covered bonds provide an additional source of funding for mortgages while providing stronger incentives for sound underwriting practices than securitizations," Bair testified.

But she said the market for covered bonds was hampered by uncertainty about how they would be handled when a bank becomes insolvent. FDIC addressed this by issuing guidance in April clarifying how they would be treated in the case of insolvency and establishing safeguards to permit the prudent and incremental development of a covered bond market.

Bair explained that the guidance indicated covered bond issuances must be made with the approval of the bank's primary regulator and that total covered bonds be limited to four percent of an institution's total liabilities.

"Importantly, the collateral for the covered bonds must be secured by perfected security interests under applicable state and federal law on performing mortgage loans on one- to four-family residential properties, be underwritten at the fully indexed rate and rely on documented income in accordance with existing supervisory guidance governing the underwriting of residential mortgages," she said. "The FDIC's guidance should permit the development of a covered bond market in a way that permits bank supervisors to evaluate the growth and risks of this funding mechanism."

The FDIC chairman touched upon her proposed plan Home Ownership Preservation Loans, where the government would provide $50 billion to pay down 20 percent of an existing mortgage so the loan-to-value would leave the borrower in a better position to refinance.

Bair also noted the FDIC has submitted a comment letter to the Federal Reserve Board about concerns the agency has with proposed amendments to Regulation Z.

Among recommendations made was the implementation of a standard that would require lenders to determine a borrower's ability to repay a loan and a prohibition of underwriting based only on the initial teaser rate for all high-priced and nontraditional mortgage loans. In cases where debt-to-income ratios exceed 50 percent, the agency recommended a disclosure be provided to borrowers and investors.

FDIC also called for a ban on the use of prepayment penalties, yield-spread premiums and stated-income underwriting on high-priced mortgages as well as a prohibition on stated-income nontraditional loans. It also said a proposed requirement that borrowers on high-priced loans maintain escrow accounts for taxes and insurance for at least 12 months be extended for a longer period.

Political Mortgage News | Mortgage Laws
Mortgage people in politics. Political contributions by mortgage companies. Coverage of political support by lenders and executives. GSE lobbying and issues.

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders