The FHA’s total capital resources fell slightly during the fourth quarter of 2011, even while the rate of serious delinquencies edged higher, according to a quarterly report released this week. The FHA Mutual Mortgage Insurance Fund had $33.3 billion in total capital resources as of the end of December, down from $33.7 billion at the end of September. While the report does not cover the program’s capital ratio – a minimum level of reserves set by Congress that the program has failed to reach over the past two fiscal years – it’s likely that the FHA may have slipped further behind. The agency...

The Federal Housing Finance Agency is running the numbers again on principal reduction for Fannie Mae and Freddie Mac loans to factor in the Obama administration’s offer to pay investor incentives to the government-sponsored enterprises. According to reports, Fannie and Freddie are more open to the idea of writedowns. For months, FHFA Acting Director Edward DeMarco has maintained that principal forbearance is a more effective way to help underwater GSE borrowers while protecting the financial interests of the GSEs and the Treasury Department. DeMarco acknowledged that the agency is “having...

Banks will receive some release from liability for loan originations in the $25 billion mortgage settlement involving the industry’s five largest servicers, state attorneys general and the federal government, according to experts participating in an Inside Mortgage Finance webinar this week. While the settlement is often described as “landmark,” industry experts note that major components were drawn from a hodgepodge of federal and state initiatives. The detailed servicing standards, for example, are a “synthesized cut-and-paste” from sources including Office of the Comptroller of the Currency...

The mortgage industry told the Consumer Financial Protection Bureau that the recent state attorneys general settlement contains a robust set of consumer protections that ought to be used as the framework for developing national servicing standards. However, industry representatives expressed concern that such an initiative could create additional barriers to entry to the servicing business. “First and foremost, the AG settlement will provide substantial relief to homeowners and will establish significant new homeowner protections for the future,” the Mortgage Bankers Association said in a recent...

Lenders, home builders and affiliated settlement service companies are lobbying the Consumer Financial Protection Bureau to preserve the ability of affiliated settlement service providers to do business with one another under the final ability-to-repay/qualified mortgage rule the agency is charged with writing. “We strongly support a competitive mortgage market where builders and lenders large and small, unaffiliated and affiliated, as well as other settlement service providers actively compete to provide sound mortgage products and ancillary settlement services to consumers,” said the Leading...

Nearly two months after the House and Senate overwhelmingly voted to curtail bonus payments to Fannie Mae and Freddie Mac executives, congressional lawmakers last week approved a final bill to send to the president’s desk for signature. Among the amendments included in the Stop Trading on Congressional Knowledge Act of 2012 – which would bar members of Congress and staffers from using non-public, inside information for personal benefit – are prohibitions on bonus payments to top executives of the two government-sponsored enterprises while they remain in conservatorship. The STOCK Act also...

The steady decline in home loans outstanding in the market continued for a fourth straight year in 2011, with the total servicing market shrinking to $10.291 trillion. That was down 2.2 percent from the previous year. The only sector that has seen any growth was Ginnie Mae servicing, which increased 14.4 percent last year even though FHA lending has begun to taper off. The total supply of Fannie and Freddie servicing was down 1.1 percent and 4.0 percent, respectively, though they still account for the two largest components in the market, 27.9 and 17.3 percent of the amount...(Includes two data charts)

The Treasury Department this week finished winding down its holdings of Fannie Mae and Freddie Mac MBS, claiming a positive return of $25 billion for the U.S. taxpayers from a market stabilization initiative launched in the teeth of the 2008 financial market meltdown. Treasury’s holdings of MBS issued by the two government-sponsored enterprises peaked at $197.6 billion in December 2009. “These MBS purchases helped preserve access to mortgage credit during a period of unprecedented market stress,” the agency said. The Federal Reserve agency MBS investment program was far bigger, peaking at $1.12...

An estimated 82.8 percent of single-family mortgages originated in 2011 ended up being financed through securitization, according to a new Inside MBS & ABS analysis. That’s the second highest level on record, falling slightly below the 84.4 percent securitization rate in 2009. Virtually all government-insured mortgages are securitized through the Ginnie Mae program, which securitized some $284.6 billion in newly originated FHA and VA loans last year. The big increase in securitization rate came in the conventional conforming market, where high loan limits have greatly expanded (Includes one data chart)...

Last week, the 2nd Circuit Court of Appeals ruled that Judge Jed Rakoff of the District Court for the Southern District of New York erred when he blocked the $285 million agreement the Securities and Exchange Commission and Citigroup struck to settle a dispute over MBS that later turned toxic when the market tanked. Market observers think it likely means the settlement is back on track, and a good sign for the market, “with sanity and certainty prevailing,” as one put it. In U.S. Securities & Exchange Commission v. Citigroup Global Markets Inc., the district court this past November refused to approve a...