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PREDICTIONS FOR 2013 by the regular guests Alice, Andy, & Joe

Mon, January 7, 2013 12:00 pm CST

Here is my contribution to this week’s program.

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(transcript from http://www.blogtalkradio.com/lykken-on-lending/2013/01/07/weekly-mortgage-housing-market-update )

Hi Dave. I was able to find three items of interest in the last week.

We all know that 95% of all mortgage origination now is touched by the government; that is guaranteed by Ginnie Mae, Fannie Mae, and Freddie Mac. There are three areas that I would like to discuss today are also are touched by government influence.

1. First up are two FHFA related articles. Edward DeMarco has withstood tremendous political pressure to offer principal reductions, much to the chagrin of the administration. Talk is that DeMarco will likely be replaced soon. This could quickly usher change.

The first article that I found at Naked Capitalism blog implies that Fannie and Freddie could institute a refi program for underwater subprime mortgages. The GSEs would be the stuffees by taking on additional risk.

The second FHFA inspired article comes from HousingWire which cites a Compass Point Research study predicting that there will be a large expansion of the HARP program for Fannie and Freddie owned loans. Apparently the head of the FHFA has considerable latitude in being able to expand this program.

2. The second big story of the week is that a settlement on Robo signing has been reached with large servicer banks. You might remember that the first big settlement was for $25 billion and was part of the 41 state attorney general settlement.

This new Robo signing settlement was agreed to by the OCC and the large bank servicers.

The New York Times reports that these banks will pay a $10 billion to get the Robo signing scandal off their backs. $10 billion might seem like a large amount.

However one of my favorite bloggers strongly disagrees, and I have been anxiously awaiting her reply to all of this. I am not disappointed.

Yves Smith writes the Naked Capitalism blog, the third most popular financial blog on the web. She goes into detail about how this Robo signing settlement is only a slap on the back. She says that the large bank servicers are getting off easy. Her post is definitely one you should take some time to read and it is filled with lots of information to consider.

3. Will QM be determined this week? The last big story of the week could an immediate market impact. The CFPB just might give us a definition of a qualified mortgage or QM.

HousingWire has an article quoting a lawyer from the from Ballard Spahr law firm in Washington.

We might know what QM looks like as soon as Wednesday of this week … two days from now. The CFPB is going to be offering hearings to the public on QM that are held on January 10 & 17. Wednesday is January 9, one day before the first hearing. Ballard Spahr opines that the CFPB will release QM definition the day before the public hearings start.

Determining QM is an important necessary first step.

Later this year the CFPB will have to tackle QRM, which in my opinion will be more difficult.

That’s it for this week. 

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