Servicing and delinquency issues in recent years have prompted three of the four major bank portfolio lenders to decrease their focus on portfolio originations. Meanwhile, Wells Fargo has indicated that it is willing to continue to increase its first-lien portfolio holdings, seeing attractive returns relative to other investing options. Bank of America and JPMorgan Chase decreased their first-lien mortgage portfolio holdings in the third quarter of 2011 compared with the previous quarter, according to the Inside Mortgage Finance Bank Mortgage Database. The banks ranked first and third, respectively ... [Includes one data chart]

Reform of the government-sponsored enterprises is seen as an essential step toward the widespread resumption of non-agency securitization. However, industry analysts suggest that significant action on GSE reform will not begin until after the November 2012 elections. “We are still nowhere close to any legislation that has a realistic possibility of even being enacted,” said Lawrence White, a professor of economics at New York University, at a seminar this week hosted by the American Securitization Forum. “The can will continue to get kicked down the road until after November 2012.” ...

Bank of America and other large mortgage servicers are seeking a meeting with the Federal Housing Finance Agency to address concerns about the latest version of the Home Affordable Refinance Program for underwater Fannie Mae and Freddie Mac borrowers. Since HARP was first launched in 2009, it has failed to meet expectations. The government quickly expanded the program to include loans with current loan-to-value ratios of up to 125 percent, which accounted for a very small share of business. Under HARP 2.0, which went into effect this month but won’t be fully up to speed until the second quarter of...

While Federal Housing Finance Agency Acting Director Edward DeMarco has been steadfast in his refusal to consider principal reductions for Fannie Mae and Freddie Mac loans, there are indications he may allow a new principal paydown proposal. Many consumer protection groups and regulators argue that principal reductions will protect, instead of degrade, taxpayers’ investment in the government-sponsored enterprises. Principal reduction can help revive a housing market that continues to be stressed by declining house prices and weak economic fundamentals, they say. Principal reductions have taken...

The supply of outstanding single-family MBS in the market fell 0.6 percent during the third quarter of 2011, according to a new analysis by Inside MBS & ABS. There was a total of $6.544 trillion of single-family MBS outstanding at the end of September, the lowest level since the third quarter of 2007. Although MBS supplies have been declining steadily over the past four years, securitized loans actually represent a historically high 63.3 percent of total home loan debt outstanding as of the end of the third quarter. The steepest decline is in non-agency MBS, a...(Includes one data chart)

Market experts and participants are uncertain as to just how capable the private sector is to step in and replace Fannie Mae and Freddie Mac, as legislative initiatives to deal with the government-sponsored enterprises and reform the non-agency MBS market gain some momentum in Congress. “I think the problem so far has been the fear that the flow of credit would dry up if we try to extract the government from the mortgage finance system. With $5 trillion in GSE/agency debt out there, it’s a compelling fear,” said Ralph Daloisio, a managing director of the New York-based structured finance group of...

The Fixed Income Clearing Corp., a subsidiary of the Depository Trust & Clearing Corp., has filed an application with the Securities and Exchange Commission to provide central counterparty (CCP) and pool netting services for MBS transactions. According to the filing, the CCP and new pool netting services would be available through the FICC’s MBS Division. Through its subsidiaries, the DTCC provides clearing, settlement and information services for equities, corporate and municipal bonds, government and private MBS, money market instruments and over-the-counter derivatives. The DTCC...

Republican lawmakers in the House advanced an ambitious bill to create a regulatory framework for non-agency mortgage securitization over its first legislative hurdle this week, although they failed to gain much Democratic support and the future for mortgage reform legislation in the Senate remains highly uncertain. The House Financial Services Subcommittee on Capital Markets and the Government Sponsored Enterprises approved draft legislation, the Private Mortgage Market Investment Act, introduced by its chairman, Rep. Scott Garrett, R-NJ. The amended legislation, which...

The volume of home mortgage debt outstanding sank to a five-year low as of the end of third quarter of 2011, according to new data released by the Federal Reserve. The agency reported that the outstanding volume of single-family mortgage debt fell 0.6 percent during the third quarter, dropping to $10.336 trillion. That marked the 15th consecutive quarterly decline and the lowest level since the third quarter of 2006. The only component in the servicing market that’s showing much growth is the Ginnie Mae program, where the outstanding balance of...(Includes two data charts)

The Federal Housing Finance Agency filed a lawsuit in the U.S. District Court for the Northern District of Illinois against the City of Chicago this week to keep it from enforcing its recently amended “Vacant Buildings Ordinance” against Fannie Mae and Freddie Mac. The move may provide servicers a way to fight the ordinance without bringing upon themselves any enforcement action from the city while the litigation is pending, according to some observers. “The City of Chicago is interfering unlawfully with FHFA’s federally mandated oversight and exercise of discretion, as conservator...