A win by Republican presidential contender Mitt Romney should benefit the MBS market more than an Obama reelection because it would reduce the chances of revisiting principal forgiveness for underwater borrowers, according to analysts. Knowing little about Romney’s position about housing finance other than his intention to lower taxpayer exposure to Fannie Mae and Freddie Mac, trim the government’s real estate-owned inventory and come up with more foreclosure alternatives, Deutsche Bank analysts presume a Romney administration would oppose principal forgiveness. In the event of a second term, President Obama would likely use...

Look for quality control at both Fannie Mae and Freddie Mac to be a “critical” component of the recently unveiled GSE representation and warranty framework as the first, best method to curb prospective putbacks, a Federal Housing Finance Agency official advises. Maria Fernandez, the FHFA’s associate director of housing and regulatory policy, told attendees of an Inside Mortgage Finance webinar last week that the Finance Agency has heeded the pleas from the industry that QC needed to be done sooner to allow for a clearer understanding of the process.

With third-quarter earnings results right around the corner for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency last week released a revised range of projected draw-downs the GSEs could take from the U.S. Treasury over the next three years. Fannie’s and Freddie’s total taxpayer cash infusion could top as much as $209 billion by the end of 2015 – a “savings” of more than $100 billion from similar projections one year ago, according to the Finance Agency.

The Federal Housing Finance Agency and the Consumer Financial Protection Bureau announced this week they will partner to create a national mortgage database to provide detailed information about mortgage loans. “The database will primarily be used to support the agencies’ policymaking and research efforts and to help regulators better understand emerging mortgage and housing market trends,” said the FHFA and CFPB.

No matter who sits in the Oval Office or which party controls Congress following next week’s election, expect GSE reform to remain a secondary priority in 2013, despite the best efforts of select lawmakers who want to get the legislative ball rolling, experts say. A functioning non-agency mortgage-backed securities market is necessary before members of Congress can be convinced to move forward with GSE reform, according to Rep. David Schweikert, R-AZ. Schweikert told attendees of the ABS East conference in Miami last week that’s why he plans to introduce legislation during the 113th Congress to establish a non-agency MBS framework.

The Federal Home Loan Bank Office of Finance announced this week that preliminary combined net income for the 12 FHLBanks rose by 19.6 percent to $660 million in the third quarter of 2012, up from both $552 million in the second quarter and $469 million in the third quarter of 2011, according to the Federal Home Loan Bank Office of Finance. For the first nine months of the year, the FHLBanks earned $1.94 billion, $867 million more than the Banks earned during the same time last year. The Office of Finance attributed the increases to be primarily driven by changes in non-interest income.

The streamlined short sale programs announced last summer by Fannie Mae and Freddie Mac received an extra boost from mortgage insurers as the programs took effect Nov 1.The GSEs this week announced signed delegation agreements with nine private mortgage insurance companies to allow Fannie and Freddie servicers to complete short sales and deeds-in-lieu without seeking approval from the MI.

The government’s civil mortgage fraud lawsuit filed last week against Bank of America and Countrywide Financial for allegedly scheming to defraud Fannie Mae and Freddie Mac could have serious adverse consequences for the industry going forward, according to an industry attorney. Filed by the U.S. Attorney for the Southern District of New York, the government contends that since the U.S. Treasury has been forced to bail out the two GSEs, losses suffered by Fannie and Freddie can be recovered under the False Claims Act – a federal law that provides for treble damages and penalties. Laurence Platt, financial services practice leader at K&L Gates, warned participants during an Inside Mortgage Finance webinar that the government’s lawsuit against BofA and others like it sure to follow, threatens to turn “every low-level rep and warranty” with Fannie or Freddie into a federal case.

The Federal Housing Finance Agency can and should impose greater transparency standards on Fannie Mae and Freddie Mac given the two GSEs’ linchpin role in the mortgage market today, according to the head of the Mortgage Bankers Association. MBA President and CEO David Stevens at the association’s annual convention in Chicago two weeks ago called for the Finance Agency – as GSE conservator – to require Fannie and Freddie to comply with public notice and comment rules before the GSEs impose new rules on the real estate finance industry. Taxpayer-supported Fannie and Freddie, along with Ginnie Mae – a wholly owned government corporation within the Department of Housing and Urban Development – currently backstop some 90 percent of all new mortgages.