Department of Housing and Urban Development Secretary Shaun Donovan said this week HUD is considering additional steps to improve the financial health of the FHA single-family program, including raising FICO score requirements and supporting legislation that would take the FHA loan limits back to pre-crisis levels. The HUD secretary found himself in the hot seat before the Senate Committee on Banking, Housing and Urban Development, explaining the results of a recent actuarial audit that placed the FHA’s Mutual Mortgage Insurance Fund capital reserve ratio below zero at negative 1.44 percent, representing a negative economic value of $16.3 billion. Sen. Richard Shelby, R-AL, ranking minority member of the committee, raised...

Commercial banks and savings institutions continued to increase their MBS holdings during the third quarter, despite more competition for the still-shrinking asset class. A new Inside MBS & ABS analysis of bank call report data shows that banks and thrifts held a record $1.617 trillion of residential MBS as of the end of the third quarter, up 0.5 percent from the previous quarter. All of the growth came from commercial banks, as thrift MBS holdings continued to decline, dropping 1.3 percent to $175.6 billion. Banks managed to increase...[Includes two data charts]

A three-judge federal panel this week heard a rare interlocutory appeal by one of the defendants in a series of lawsuits that the Federal Housing Finance Agency has filed in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac. Lawyers for UBS Americas argued before the Second Circuit Court of Appeals that it should reverse the May ruling by Manhattan Federal Judge Denise Cote denying the bank’s motion to dismiss the FHFA’s lawsuit as time-barred under the statute of repose. The FHFA sued...

New York Attorney General Eric Schneiderman said he plans to file more lawsuits against non-agency MBS issuers using the Martin Act, which allows platform-wide cases as opposed to cases focused on specific deals. “It’s not about one deal or five deals or 10 deals, it’s about the entire course of conduct,” he said last week after filing a platform-wide lawsuit against Credit Suisse Securities. The lawsuit was filed as part of the RMBS Working Group’s efforts, including a similar lawsuit Schneiderman filed in October against JPMorgan Chase. “The actions you have seen...

Ginnie Mae is beefing up its staff to handle increased securitization volume, a growing number of applications for new issuer approval, and closer monitoring of current participants in the Ginnie Mae program, according to a top agency executive. The agency plans to have 130 market professionals on staff by 2013, up from 70 in 2010, to ensure compliance of new and current participants with existing guidelines and the agency’s adaptation to a changing MBS market, said Michael Drayne, senior vice president at Ginnie Mae’s Office of Issuer and Portfolio Management. “We have been given...

The American Securitization Forum has published an implementation guide to the due diligence requirements for securitization positions under the market risk rule issued by the federal bank regulators in August, as well as guidance the Office of the Comptroller of the Currency put out this past June. One of the primary purposes behind the rule and the guidance was to lessen industry dependence on credit ratings and to promote instead greater reliance upon proper due diligence. “With the adoption of the final rules, market participants have been working...

The Home Affordable Refinance Program surged to a record 286,044 loans during the third quarter of 2012, but volume began to slow in September, according to an Inside MBS & ABS analysis of new data released by the Federal Housing Finance Agency this week. HARP business was up 17.8 percent from the second quarter to the third, based on loan count, but overall refinance activity at Fannie Mae and Freddie Mac was up 21.8 percent for the same period. The program for underwater Fannie and Freddie borrowers saw a huge increase in volume at the start of the year as lenders implemented a series of changes in the program. Activity surged again in the second quarter when loan-to-value limitations were largely taken out of the equation. But HARP volume fell off...[Includes one data chart]

The Federal Housing Finance Agency continues to add to its ranks with some three dozen new positions budgeted for the current fiscal year, but despite a full-court press on hiring, the agency’s acquisition of skilled staffers, particularly more examiners, remains a challenge, according to FHFA reports. The FHFA’s Performance and Accountability Report boasted a complement of 574 employees at the close of fiscal year 2012, ending Sept. 30, a 10.6 percent increase from the agency’s reported FY 2011 head count of 519.

Fannie Mae and Freddie Mac have reduced their dependency on U.S. government support, but there may be restructuring issues within the budget talks to resolve the looming “fiscal cliff,” according to Fitch Ratings. Fitch this week affirmed its “AAA” rating for both Fannie and Freddie even as its outlook for the two GSEs remains “negative.” However, the rating agency warned that its outlook for Fannie and Freddie depends upon the economy and the ability of political leaders to come to an accord on taxes and government spending before year’s end.

The Federal Housing Finance Agency has announced this week that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2013 will remain at existing levels. In most of the country, the loan limit – established under the terms of the Housing and Economic Recovery Act of 2008 – are calculated each year. HERA sets loan limits as a function of median home values in local areas.