The use of Federal Home Loan Bank advances among bank and thrift members fell overall during the third quarter of 2011. Two of the three top members show a drop-off larger than the overall industry’s year-over-year rate of decline, according to the Inside Mortgage Finance Bank Mortgage Database.All of the nation’s bank and thrifts reported using a combined $323.3 billion in advances as of Sept. 30, 2011, down 5.2 percent from the second quarter and off 19.7 percent from the same period a year earlier.The Federal Home Loan Bank’s Office of Finance in its third quarter combined finance report cited decreased member demand, regular maturities and continuing prepayments for the third quarter decline.

The Federal Home Loan Banks of Seattle and New York recently announced personnel changes in the executive ranks of both Banks.The Seattle Bank’s Board of Directors last week appointed Michael Wilson as its new president and CEO, replacing acting president and CEO Steven Horton, who himself replaced Richard Riccobono in October 2010. Wilson, currently executive vice president and chief business officer of the FHLBank of Des Moines, brings 17 years of experience in the FHLBank system, serving in various Bank posts. He will join the Seattle Bank effective Jan. 30, 2012.

Industry trade groups, as well as Fannie Mae and Freddie Mac’s regulator, are questioning the wisdom of Congress as lawmakers in both chambers have bills pending to hike the fees charged to guarantee GSE mortgages as a way to help offset the cost of extending the payroll tax cut through 2012.Both House and Senate versions of tax cut extension bills would add an additional 10 basis points to the guarantee fees charged by Fannie and Freddie through 2021. The increase would offset about $35.7 billion in costs, including $1.3 billion in the first year, according to the Congressional Budget Office.As Inside the GSEs went to press, the prospect of any tax cut extension was in doubt after the House rejected the bill calling for a two-month extension. Instead, House Republicans demanded immediate talks with the Senate on a year-long plan but the Senate ruled out further negotiations until the House passes the stop-gap measure.

California Attorney General Kamala Harris filed suit this week against Fannie Mae and Freddie Mac, taking up a notch her probe of the two GSEs’ mortgage lending and foreclosure practices.The lawsuits, filed in California Superior Court in San Francisco, seek to compel the companies to turn over documents the AG’s office had sought through a subpoena served to the two companies on Nov. 15.The Federal Housing Finance Agency directed Fannie and Freddie not to respond to the subpoenas.The subpoenas sought information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices.

House Republicans last week moved a bill that would create a new non-agency residential mortgage-backed securities market to the full Financial Services Committee while the clamor grows for Congress to act on a more “comprehensive” legislative solution to GSE reform.By an 18-15 vote, the House Financial Services Capital Markets and Government-Sponsored Enterprises Subcommittee approved the Private Mortgage Market Investment Act, advancing the measure to the full committee.The bill’s sponsor and Subcommittee Chairman Rep. Scott Garrett, R-NJ, said passage of the measure is an “important first step” to permit private market participants to re-enter the marketplace without adding more burdens to the taxpayer.The revised bill would require the Federal Housing Finance Agency and the Securities and Exchange Commission to create several categories of mortgages with uniform underwriting standards for each, as well as to develop standard and uniform securitization agreements.

The Federal Housing Finance Agency is cutting lenders a break for the holiday season in the form of a deadline extension for implementing changes to how lenders submit mortgages to Fannie Mae and Freddie Mac.The FHFA announced last week that Fannie and Freddie would delay implementation dates for the Uniform Loan Delivery Dataset, a key component of the GSEs’ Uniform Mortgage Data Program.“Industry participants have demonstrated continued support for the UMDP and the updated timeline will allow for a successful transition to a new loan delivery format,” said the Finance Agency. Announced by the GSEs in May 2010, the UMDP initiative was established to help improve loan data accuracy, simplify the exchange of data and increase confidence to lending institutions that the loan data provided are complete and accurate.

The official watchdog of the Federal Housing Finance Agency found a sympathetic audience in senators last week as the head of the FHFA’s Office of Inspector General sounded a now-familiar refrain – that the Finance Agency is falling short in its oversight of Fannie Mae and Freddie Mac.Testifying before the Senate Banking, Housing and Urban Affairs Committee, FHFA Inspector General Steve Linick said the OIG has identified “deficiencies” in Finance Agency operations which appear to reflect two “significant and related trends.” First, the FHFA has relied too much on the determinations of the two GSEs without independently testing and validating those determinations, testified Linick. “Second, FHFA was not proactive in oversight and enforcement and accordingly, resource allocations may have affected its ability to oversee the GSEs and enforce its directives,” said Linick. “Both trends have emerged in a number of our reports.”

The Federal Housing Finance Agency last week filed suit against the city of Chicago claiming that its attempt to enforce a recently amended vacant buildings ordinance on properties owned by Fannie Mae and Freddie Mac “impermissibly encroaches” on the FHFA’s role as sole regulator of the GSEs.Filed in the U.S. District Court for the Northern District of Illinois, the FHFA’s lawsuit on behalf of the two GSEs seeks to prevent the city from enforcing the ordinance which requires mortgagees to pay a $500 registration fee for vacant properties and requires monthly inspections of mortgage properties to determine if they are vacant. "The ordinance would impose on the enterprises the responsibilities, but not the benefits of ownership of vacant property on which they hold the mortgage,” said the FHFA in a statement. “The ordinance would create risks and liabilities for the enterprises at a time when they are already supported by taxpayers, including those in the city of Chicago.”

The Federal Housing Finance Agency should refrain from implementing a proposal that would overhaul the mortgage servicing compensation system as it has failed to make a “compelling case” as to why it is necessary to change a system that has “worked well for decades,” according to the Mortgage Bankers Association.In a comment letter sent to the Finance Agency earlier this month, MBA President and CEO David Stevens said the FHFA’s proposed changes would dramatically alter residential servicing, origination and secondary market operations, not necessarily for the better.“The current servicer compensation model is still the best approach and making radical changes, like the proposed ‘fee-for-service,’ will have dramatic impacts not just on originators, servicers and investors but also on borrowers in both the costs they pay to get a mortgage and the support they receive from their servicers,” said Stevens.

Last month, as part of the Consumer Financial Protection Bureau's "Know Before You Owe" project, the CFPB unveiled two new prototypes for a single mortgage disclosure to replace the HUD1 Settlement Statement and final Truth in Lending disclosures. This month, the bureau is paying close attention to closing costs by trying to figure out which of two different designs communicates both the closing costs and transaction details clearly. One is similar to the existing HUD]1 settlement statement that consumers now receive when they close a mortgage loan. The other is based on the prototype for the disclosure consumers get when they first apply. gWefre curious to see if something different may work even betterh than the earlier iterations, the CFPB said. gThis new design provides the same information as the other prototype, but it uses a format for the closing costs that is based on our application disclosure prototype. It has sections that correspond to the application disclosure and a little more plain language.h