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» VISIT US ONLINE @ DSNEWS.COM Compiled by the DS News Staff FIVE MINUTES WITH Corrine M. Burger PAGE 25 SVP AND CHIEF CONTROL OFFICER FOR THE MORTGAGE BANKING DIVISION OF JPMORGAN CHASE INSIDE THE JOURNAL // MOVERS & SHAKERS // ON THE WEB // THE APP SPECTRUM FED GOVERNOR CALLS FOR 'BALANCE' WITH NEW MORTGAGE RULES As the industry prepares to implement the Consumer Financial Protection Bureau's (CFPB) new ability-torepay rules, Federal Reserve Governor Elizabeth Duke warns new consumer protections may come at a cost to the industry as lower-quality-credit borrowers are precluded from the housing market. "It will be up to policymakers to find the right balance between consumer safety and financial stability, on the one hand, and availability and cost of credit, on the other," Duke said during a speaking engagement at a real estate finance conference last month. Loans that do not fall under the CFPB's qualified mortgage (QM) standards may soon pose increased costs to lenders because they are open to more potential litigation, according to Duke. If securitized, lenders must maintain part of the risk for these loans—another potential for increased costs. Lastly, Duke pointed out that "investors may be wary of investing in securities collateralized by non-QM loans because it is difficult to gauge the risks." Increased costs may deter lenders from making non-QM loans to lower- credit-quality buyers, and those attempting to cover these added costs by charging higher interest rates or points and fees may have a hard time doing so. Lenders who charge higher interest rates may not hold as strong of a defense against a lawsuit alleging violation of the ability-to-repay rule, according to Duke. Additionally, QM rules prohibit points and fees that exceed 3 percent of the loan amount, Duke points out. While conceding this stipulation does protect consumers from being "overcharged or defrauded," the rule leaves lenders without a way to account for the added risk and costs of lending to lower-quality borrowers and may lead lenders to stop making these loans at all, Duke said. As the broader economy continues to improve, household formation will increase, according to Duke, "but if credit is hard to get, these will be rental rather than owner-occupied households." "And without first-time homebuyers, the move-up market will be sluggish, new and existing home sales will be more subdued, and purchase mortgage volumes will return only slowly," Duke said. "It will be up to policymakers to find the right balance between consumer safety and financial stability, on the one hand, and availability and cost of credit, on the other." A look at facts you didn't know you couldn't live without One-fifth of real estate-related searches happen on mobile devices, according to Google's internal data from the third quarter of 2012. top10 Take a look inside the numbers data b i t s TOTAL HARP REFINANCES* 2,165,021 MOST HARP REFINANCES SINCE 2009* California301,327 Florida175,686 Illinois147,252 Michigan144,709 Arizona106,387 Georgia95,717 Washington95,248 Minnesota80,941 Ohio76,449 New Jersey 66,168 FEWEST HARP REFINANCES SINCE 2009* North Dakota 435 South Dakota 1,175 Guam, Puerto Rico, Virgin Islands 1,680 Arkansas1,649 Vermont1,758 Wyoming1,922 District of Columbia 2,447 West Virginia 3,707 Montana4,513 Nebraska5,260 Source: Federal Housing Finance Agency's December 2012 Refinance Report *From program inception date of April 1, 2009, through December 31, 2012 The difference between the estimated market values of REOs and their actual sale prices has narrowed to pre-crisis levels, averaging 12.2 percent in Q4 2012, according to FNC, Inc. 9

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