The Federal Housing Finance Agency is ready, willing and able to use its big stick as regulator of the GSEs to play hardball against municipalities that move forward with proposed efforts to seize underwater mortgages via local government eminent domain powers, say industry observers. One year ago nearly to the day after the FHFA warned “action might be necessary” to protect the GSEs, the Finance Agency released a legal memorandum outlining a number of steps it could take in response to an eminent domain action to restructure mortgages. The FHFA reiterated its “significant concerns” as conservator of Fannie Mae and Freddie Mac, as well as regulator of the 12 Federal Home Loan Banks, that widespread seizures of the loans and their subsequent refinancing “presents a clear threat to the safety and sound operations of the GSEs.”

The Federal Housing Finance Agency may pursue a fraud lawsuit against Ally Financial despite the bankruptcy status of Ally’s Residential Capital mortgage unit, a Manhattan federal judge ruled this week. U.S. District Court Judge Denise Cote denied Ally’s request to stay the FHFA’s litigation, a typical motion by bankrupt debtors to defer litigation as they seek to reorganize. In 2011, the FHFA filed 18 lawsuits alleging that Ally and other large financial institutions misrepresented the quality of non-agency mortgage-backed securities sold to Fannie Mae and Freddie Mac before the 2008 financial crisis.

President Obama’s cursory mention of his nominee to head the Federal Housing Finance Agency during his big housing policy speech last week in Phoenix continues to fuel doubts as to just how committed the White House is to replace current FHFA Acting Director Edward DeMarco. Watt’s nomination cleared the Senate Banking, Housing and Urban Affairs Committee last month along a party-line vote amid Republican vows to block the “unqualified” 20-year House veteran. Obama afforded Watt only three sentences in his speech, noting that his nomination should receive “an up or down vote without any more obstruction or delay.”

Despite a “proactive and thorough” horizontal review of the Federal Home Loan Banks’ previously diagnosed deficiencies in unsecured lending practices, the Federal Housing Finance Agency needs to clamp down harder on the FHLBanks to ensure total compliance, according to a new report by the FHFA’s Office of Inspector General.The FHFA-OIG report issued last week follows up on the official watchdog’s June 2012 audit in which it flagged “potentially risky unsecured credit management practices” by the 12 FHLBanks. Over 900 primary and secondary unsecured credit violations at seven FHLBanks were noted, with risk-management deficiencies “of varying degrees” found at the other five Banks, noted the OIG.

Fannie Mae and Freddie Mac, at the direction of the Federal Housing Finance Agency, are developing a standardized dataset to support the Consumer Financial Protection Bureau’s yet-to-be finalized consolidated closure disclosure forms, the GSEs recently announced. The GSEs’ new Uniform Closing Dataset is a component of the FHFA-mandated Uniform Mortgage Data Program, which is designed to standardize the way loan data is defined, captured and delivered. “The UMDP is a multifaceted, ongoing program in which the GSEs develop and implement mortgage data standards for the single-family loans we purchase and/or securitize,” Freddie said. “Capturing consistent and accurate data is essential to our ability to effectively assess risk on the mortgages we purchase and will create efficiencies for all industry participants.” In conjunction with the uniform appraisal data standards, Freddie said it has worked with Fannie on a joint appraisal data delivery portal, the Uniform Collateral Data Portal, for the electronic capture of appraisal data.

The voluntary attrition rate of experienced and knowledgeable staffers within Fannie Mae’s and Freddie Mac’s capital markets businesses remains a concern, but for the time being the problem “appears to have been mitigated,” according to the Federal Housing Finance Agency’s official watchdog. Although employee turnover at both GSEs has been an issue that accelerated following the companies’ move into government conservatorship in 2008, the FHFA’s Office of Inspector General zeroed in on staffing at Fannie’s Capital Markets Group and Freddie’s Investments & Capital Markets Division “because of their portfolios’ size, complexity and susceptibility to sustaining significant losses.”

The U.S. Treasury will receive a massive cash payment of $14.6 billion by Fannie Mae and Freddie Mac next month following robust second-quarter earnings, leaving the two GSEs potentially within a quarter or two of reaching the point where their dividend payments equal the massive bailout provided to them by taxpayers. The period ending June 30, 2013, saw Fannie reporting $10.1 billion in net income, the company’s sixth consecutive quarterly profit, while Freddie posted $5.0 billion in net income. The second quarter was Freddie’s seventh straight profitable quarter and its second largest in company history. Under the revised conservatorship agreement rolled out a year ago by the Federal Housing Finance Agency and the Treasury Department, any GSE net worth exceeding $3.0 billion is impounded by the government.

Both sides of the mortgage banking business posted modest gains in profitability during the second quarter of 2013, according to a new analysis by Inside Mortgage Trends of earnings reports from nine lenders. The group reported a total of $4.34 billion in production-related income during the second quarter, up 2.8 percent from the first three months of the year. That’s a relatively strong showing given that their total origination volume increased by just 0.7 percent ... [Includes one data chart]

A fresh batch of earnings reports from 15 major mortgage lenders underscored the strength and breadth of the industry’s financial success in the second quarter of 2013. A group of 15 lenders, including a number of nonbanks and regional banks that typically report somewhat later in the earnings cycle, posted a combined $794.8 million in earnings from their mortgage banking operations during the second quarter, according to a new Inside Mortgage Trends analysis. That was up ... [Includes one data chart]

Redwood Trust is about to have company from other real estate investment trusts looking to issue non-agency jumbo mortgage-backed securities. Two Harbors Investment will issue its first jumbo MBS later this month, and PennyMac Mortgage Investment Trust plans to issue a security by the end of September. Redwood helped revive non-agency jumbo MBS issuance beginning in 2010 and has been active in the sector ever since. Following the financial crisis, no other REITs joined Redwood even though ...