Fannie Mae and Freddie Mac were improperly prevented from increasing their guaranty fees for years during the GSEs’ conservatorship after the federal government unconstitutionally seized control of the two companies during the 2008 financial crisis and the lower fees cost investors billions of dollars, according to a federal lawsuit filed by GSE shareholders last week. The plaintiffs – including the City of Austin (Texas) Police Retirement System and Washington Federal, a Seattle-based bank – filed a class-action suit in the U.S. Court of Federal Claims in Washington, DC. The GSE shareholders seek some $41 billion in damages for what they claim was the government’s violation of their 5th Amendment rights that prohibit taking of private property for public use “without just compensation.”

It’s no secret that speculators wide and far are betting the common and preferred shares of Fannie Mae and Freddie Mac could rise significantly as their profits continue to stay robust. But according to James Lockhart, who once headed the Federal Housing Finance Agency, these speculators are likely throwing their money away. Speaking at a recent housing forum sponsored by the Bipartisan Policy Center, he noted that the Treasury Department owns the senior preferred of the GSEs and the senior stock “sits above” the junior shares. Lockhart said the government preferred will never be paid back, which means the junior holders are out of luck. Lockhart, who now serves as vice chairman of WL Ross & Co., said he does not own any stock in the two nor does he plan on buying any.

Compensation for directors at each of the 12 Federal Home Loan Banks increased in 2012, continuing a trend begun in 2011 when a director’s earnings “started to show a wide range across the FHLBanks for similar positions,” according to the Federal Housing Finance Agency. The FHFA’s fifth annual report to Congress noted that during 2012, the total fees paid to all FHLBank directors were $12.1 million, ranging from $679,817 for the 14-member board of the FHLBank of Seattle to $1.44 million for the 18-member board of the Indianapolis Bank.Compensation for the position of board chair at the Banks ranged from $60,000 at the FHLBanks of Boston and Seattle to $100,000 or more at the FHLBanks of New York, Indianapolis and Topeka.

With just a week to go, the petition drive by Fannie Mae and Freddie Mac common shareholders asking the White House to “restore fairness” to the value of their lost investment looks like it will fall woefully short of the required number of signatures. Created on June 1, the petition posted on the White House website calls for Congress, the Treasury Department and the Federal Housing Finance Agency to enact a method “to provide fairness and protection” to common shareholders of the two GSEs “and enable shareholders to have participation in the recovery value of their stock.”

The Federal Housing Finance Agency has no interest in revisiting a program that Fannie Mae spent a year developing to directly purchase force-placed insurance even as it solicited input last week from “stakeholders” during a two-day, closed-door working group. The invitation-only meeting, closed to the public and press, drew some 80 attendees representing big banks, insurers, insurance brokers, other regulators and representatives of industry and consumer groups who weighed in as the Finance Agency decides its policy direction on force-placed or lender-placed insurance. According to those in attendance at the meeting, the FHFA officials were cordial but the agenda was strictly focused on concerns that force-placed premiums might be too high and that the industry lacks serious competition.

Aligning Fannie Mae’s and Freddie Mac’s underwriting standards and creating clear standards for representations and warranties is essential for a smooth transition to a sustainable secondary market operating with an explicit, limited government guaranty, according to the Mortgage Bankers Association. The MBA’s new concept paper – the fourth of a five-part plan – suggests the Federal Housing Finance Agency set parameters for acceptable underwriting criteria by both GSEs, then allow them to offer credit terms within a “clear outer boundary.” “If we are to have a fully functioning secondary market that provides sustainable access to credit for qualified borrowers, then the development of transparent and consistent credit underwriting standards are of the utmost importance,” said the MBA.

Banks and thrifts continued to push a high volume of home mortgages into the secondary market during the first three months of 2013, but the pace was slowing, according to a new Inside Mortgage Trends analysis of call report data. The industry reported $395.8 billion in single-family mortgage sales during the first quarter, down 5.1 percent from the previous period. It was a stronger sales volume than during the first quarter of 2012, however, and ranked as the fourth largest ... [Includes one data chart]

Although Freddie Mac and Fannie Mae are reviewing recently originated mortgages more closely than they have in the past, the bulk of the whopping $13.21 billion in mortgage repurchases reported by the two government-sponsored enterprises during the first quarter came from loans originated years ago. A new Inside Mortgage Trends analysis of repurchase activity reported by the two GSEs in Securities and Exchange Commission filings shows that 80.0 percent of the buybacks recorded in ... [Includes two data charts]

Fannie Mae’s and Freddie Mac’s home retention activity declined for the most part during the first quarter of 2013, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 1.3 percent during the first quarter of the year to 183,689 and was down 14.5 percent from year-ago levels. Total home retention efforts came to 98,728 in the first quarter, an increase of 1.1 percent from the fourth quarter but down 11.6 percent from the same period a year before.

With the advent of the Consumer Financial Protection Bureau, consumer complaints have been elevated to an unprecedented level of prominence in the regulatory arena. “How many of you have had a regulatory exam that focused on complaints?” asked Lyn Farrell, managing director at Treliant Risk Advisors, at a discussion session during the recent American Bankers Association’s compliance conference in Chicago. Seeing a number of hands rise from the audience in response, she continued: “If not, you will.” ...