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44 NEW STANDARDS FOR RMBS Fitch Ratings is calling the newly recommended adjustable-rate mortgage (ARM) fallback language a "positive development" as it moves toward becoming the market standard for Residential Mortgage-Backed Securities (RMBS) backed by such mortgages. According to Fitch, the newly recommended adjustable-rate mortgage (ARM) index U.S. dollar LIBOR fallback language released by the Alternative Reference Rates Committee (ARRC), includes a "replacement event" trigger, detailed provisions for selecting a replacement index, and allowance for a change in loan margin. e language is supported by Fannie Mae and Freddie Mac is a positive development for US mortgages and is expected to become market standard for new loan originations. "e recommended fallback language provides greater clarity to consumers, and the market in general, about when and how the replacement index will be chosen; this is key as the industry looks ahead to the expiration of LIBOR at the end of 2021," Fitch states. e immediate focus of the ARRC's recommended ARM note fallback language is on new mortgage loan originations, an important development despite the relatively low percentage of ARM loans being originated today. Fitch believes that certain elements of the recommended standard could ultimately be helpful in the consideration of approaches to existing ARM loans, notably legacy LIBOR product containing less clarity in terms of fallback detail. While current pathways remain uncertain, the recommended language might serve as a guide to selecting a replacement index for legacy LIBOR product once LIBOR is no longer available. LIBOR is used globally as a reference rate for pricing loans, debt and derivatives comprising more than $240 trillion in assets, including $1.2 trillion in adjustable rate mortgages and $178 billion backing US RMBS transactions. U.S. mortgage originators are expecting to transition to using updated "uniform ARM instruments" incorporating the new fallback language once Fannie Mae and Freddie Mac establish the necessary timeline. Fannie Mae and Freddie Mac anticipate publishing the updated 'uniform ARM instruments' in Q1 2020. Originators will be given sufficient time to implement the new instruments but this should be completed well before YE 2021. FEDERAL JUDGE WEIGHS IN ON CFPB'S OCWEN SUIT According to a Florida federal judge, the Consumer Financial Protection Bureau (CFPB) is constitutionally structured, meaning an enforcement action against Ocwen Financial Corporation will not end on those grounds, even after the CFPB itself has officially adopted the legal position that its structure is constitutionally flawed, Law360 reports. U.S. District Judge Kenneth A. Marra found other grounds for dismissal in September when he booted the suit that accuses Ocwen of widespread mortgage servicing failures but gave the CFPB a chance to amend its claims after rejecting Ocwen's argument that the agency is unconstitutionally structured and therefore lacks proper authority to pursue the lawsuit. CFPB Director Kathleen Kraninger reversed the Bureau's course and agreed that the "for-cause" removal provision, which states that the president can only remove CFPB's director for "inefficiency, neglect of duty or malfeasance in office," does violate the U.S. Constitution's separation of powers, according to a brief filed earlier this year in the high court by U.S. Solicitor General Noel Francisco and in letters sent to Congress. Judge Marra said the agency's pivot does not change his view of the case, after Ocwen asked the court last month to reconsider the dismissal after the agency officially adopted the legal position that its structure, and specifically the "for-cause removal" protection afforded to its director, is in fact constitutionally flawed. "at the CFPB has shifted its own position does not discharge the court of its duty to interpret the constitutionality of [the removal protection] independently," the judge said. "Even assuming arguendo that the CFPB's structure is found to be unconstitutional, the proper remedy would be severing the unconstitutional removal provision, not dismissal of the case with prejudice." e CFPB has already amended its 2017 lawsuit against Ocwen, which alleges a host of problems with the company's servicing practices during the early and mid-2010s and was brought the same day that Florida state authorities filed their own lawsuit against the company in the same court.