The Federal Housing Finance Agency has wrongfully denied Fannie Mae and Freddie Mac permission to uphold their statutory duty under the Housing and Economic Recovery Act of 2008 to make contributions to the National Housing Trust Fund, according to a lawsuit filed by the National Low Income Housing Coalition. Fil0ed last week in the U.S. District Court for the Southern District of Florida, the suit by the NLIHC – along with the Right to City Alliance and four other individual plaintiffs – calls on the FHFA to make good on the GSEs’ obligations to make contributions into the trust fund. The fund was set up under HERA to provide subsidies to rehabilitate and fund low-income housing, but Fannie’s and Freddie’s payment obligations to the trust fund were suspended when the GSEs were placed into government conservatorship in September 2008.

The Federal Housing Finance Agency’s official watchdog recommended in a report this week that the agency devise a way to measure how its guaranty fee hikes of the past two years have actually increased the participation of private investment in the mortgage-backed securities sector. As Fannie Mae’s and Freddie Mac’s conservator, the Finance Agency directed the GSEs to increase their guaranty fees as a means to encourage greater private-sector investment in mortgage credit risk, reduce their dominant position in housing finance and limit potential taxpayer losses, the FHFA Office of Inspector General report noted. “The enterprises’ average combined guaranty fees have nearly doubled since 2011 – due to legislation and FHFA’s initiative – and FHFA plans further gradual guaranty fee increases to spur private-sector mortgage investment,” said the OIG. “However, it is not yet clear how high FHFA must increase guaranty fees to achieve its objectives.”

California remains the top source of new single-family mortgages for Fannie Mae and Freddie Mac, even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an Inside The GSEs analysis. A total of $160.3 billon home loans on Golden State properties were securitized by the two GSEs during the first six months of 2013, accounting for 23.1 percent of their total business for the half year. That was up 21.2 percent from total California production during the first six months of 2012 as the overall GSE market rose 20.2 percent from a year ago.

In a move designed to allow qualifying members to sell fixed-rate, conforming mortgage loans into the secondary market, the Federal Home Loan Bank of Seattle announced last week it has joined the Mortgage Partnership Finance Program and is now offering the MPF Xtra product.Under the MPF Xtra program, loans are sold to the FHLBank of Chicago and are concurrently sold to Fannie Mae as a third-party investor.

While Congress drafts and debates different legislative remedies to GSE reform that could take at least two years to materialize, regulators and administration officials can, and must, begin to act now to implement a mortgage finance solution, the head of the Mortgage Bankers Association said this week. At a press briefing, MBA President and Chief Executive Officer David Stevens rolled out the trade group’s five-point plan – “Key Steps on the Road to GSE Reform” – that could be immediately implemented by the Federal Housing Finance Agency and/or by Fannie Mae and Freddie Mac without the need for authorizing legislation and without disrupting the housing finance system. “Given the recent market recovery, some worry that if the status quo were to change, lenders could end up being in a worse position and lose some of the parity gained,” said Stevens. “We believe these steps are extremely important to support a competitive, robust and sustainable housing finance system regardless of the ultimate path taken by policymakers in Washington.”

A Manhattan federal judge earlier this month dismissed a class-action lawsuit against Standard & Poor’s Financial Services after finding no evidence that the rating agency defrauded investors when it gave a favorable rating to Fannie Mae stock prior to the financial crisis.The suit, filed in December 2012 on behalf of potentially hundreds of thousands of investors who bought stock in an offering by Fannie in May 2008, four months before the GSE was taken over by the government, alleged that S&P knowingly misrated Fannie’s stock. Valued at about $25 per share when it was issued, the stock dropped to about $3 per share after Fannie’s government conservatorship began in September 2008.

Most banks that have reported second-quarter earnings said their mortgage banking income declined from the first three months of 2013, but profitability remained strong, according to a new Inside Mortgage Trends analysis of corporate disclosures. A group of 15 banks that includes most of the top depository institutions in the mortgage business reported a combined $6.72 billion in mortgage banking income during the second quarter of 2013. That was up 5.0 percent from the earnings ... [Includes one data chart]

Consumer complaints filed with the Consumer Financial Protection Bureau about their residential mortgages fell to 12,531 during the second quarter, down 9.2 percent from the first three months of the year, according to an analysis of the bureau’s complaint database by Inside the CFPB, an affiliated publication. That rate of decline is better than the overall 8.2 percent drop in complaints seen across all financial services product lines in aggregate, but not as good as the declines related to ...

Many mortgage lenders make a stab at getting consumer feedback, but more often than not seem to end up with limited success, at best. The StratMor Group, a mortgage banking consultancy, and CFI Group, an analytics and technology firm, are helping lender clients find success in obtaining direct borrower feedback 24 hours, seven days a week, with their MortgageSAT service where others have been finding failure. MortgageSAT is a turnkey solution to providing real-time borrower feedback to mortgage companies ...

You would think that a bank with a small presence in mortgages would jump at the opportunity to keep the fast-growing residential arm of a merger partner. But that’s not the case with MF Financial, a mid-sized bank that earlier in the week announced that it would buy Taylor Capital, parent of Cole Taylor Bank, in a stock deal valued at $680 million. Although MF Financial took a close look at the subsidiary, Cole Taylor Mortgage, it decided that the unit is not essential to the deal. In fact, it’s so non-essential ...