The Federal Housing Finance Agency has proposed a rule to acquire explicit discretionary authority to require Fannie Mae, Freddie Mac or any of the 12 Federal Home Loan Banks to undergo a stress test every year, no matter how much the GSEs have in consolidated assets. The proposed rule, published in the Oct. 5 Federal Register, would implement a part of the Dodd-Frank Act, which requires certain financial companies with consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct an annual stress test.

Fannie Mae’s and Freddie Mac’s home retention activity declined for the most part during the second quarter of 2012, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 11.4 percent during the second quarter of the year to 190,315. Total loss mitigation for the first six months of the year fell 18.6 percent to 405,127 compared to the same six-month period in 2011.

There is vast room for improvement in how Fannie Mae and Freddie Mac manage their deficiency collections following foreclosure but it is the GSEs’ regulator that should provide more “guidance” about how to effectively pursue and collect from strategic defaulters, concluded the Federal Housing Finance Agency’s official watchdog this week.The FHFA Office of Inspector General’s latest audit found that in 2011, Fannie’s and Freddie’s vendors pursued 35,231 deficiency accounts, with a combined value of about $2.1 billion. Of this amount, vendors recouped some $4.7 million, a dismal recovery rate of 0.22 percent.

The legal backlog of cases pending against the GSEs and former company officials got a little shorter following the recent dismissal of two separate federal lawsuits against three defendants. A federal judge in Washington this week dismissed a long-simmering class-action lawsuit against Fannie Mae’s former Chief Financial Officer Timothy Howard brought by investors hoping to recover damages.Two Ohio pension funds – the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio, filed suit in 2004 related to a $6.3 billion overstatement of earnings against Fannie and three former GSE executives, including CEO Franklin Raines.

The Federal Housing Finance Agency is looking for feedback on a proposed advisory bulletin which would set forth standards to guide FHFA staff in its supervision of secured lending to insurance company members of the 12 Federal Home Loan Banks.The Finance Agency’s advisory bulletin on insurance company collateral, published in the Oct. 5 Federal Register, noted that lending to insurance company members over the last several years has come to represent “an increasingly larger portion” of FHLBanks’ overall business, with several Banks actively targeting this member segment.

Fannie Mae and Freddie Mac have released new guidelines designed to bring more of the two GSEs’ servicing requirements into alignment. The updated policies, both issued Oct. 3, focus on aligning contracts and the enforcement of remedies with seller/servicers in compliance with a Federal Housing Finance Agency directive. “The requirements announced in this bulletin build on the success [of previous announcements], and through our work with Fannie Mae, provide servicers with greater clarity, consistency and transparency across the enterprises on how servicer performance will be measured,” explained Freddie in its announcement.

A federal appeals court has refused to suspend proceedings in the case brought by the Federal Housing Finance Agency against one of the non-agency mortgage-backed securities issuers and underwriters for allegedly misrepresenting the deals that were sold to Fannie Mae and Freddie Mac. A three-judge panel of the Second Circuit Court of Appeals earlier this month made short work of rejecting the motion by UBS Americas to put the suit on hold while the appeals court hears UBS’ appeal of a lower court’s decision not to dismiss the case. “Upon due consideration, it is hereby ordered the motion is denied,” the judges ruled in their terse one-sentence Oct. 1 order.

The top mortgage lenders in the industry reported a record $8.35 billion in net income from their mortgage banking businesses during the third quarter of 2012, according to a new Inside Mortgage Trends analysis of early earnings reports. That represented a solid 9.1 percent increase over the second quarter and brought the group – which includes Wells Fargo, JPMorgan Chase, Bank of America, Citigroup and U.S. Bank – to a whopping $23.36 billion in mortgage banking income for the first nine months of the year. During the same period in 2011, these five lenders reported...

A plethora of new servicing rules from federal and state regulators are set to increase costs for servicers – particularly mid-sized and small servicers that have not faced servicing changes required by disciplinary actions. The latest and perhaps most significant proposal for servicing rules came from the Consumer Financial Protection Bureau in August. “Change imposes significant pressure on servicer costs, resources, and capacity,” David Stevens, president and CEO of Mortgage Bankers Association said last week in a comment letter submitted to the CFPB. “The mortgage industry has been going through chronic, piecemeal regulatory changes for some time, with no end in sight. The costs are becoming prohibitive for many smaller, and even larger, companies.” He warned...

Mortgages originated by lenders’ retail production programs accounted for 60.7 percent of single-family loans securitized by Fannie Mae and Freddie Mac during the third quarter of 2012, according to a new Inside Mortgage Trends analysis. Although many lenders have made strategic choices to focus on retail and scale back or abandon the wholesale market, a key factor in the dominance of retail originations was the heavy volume of refinance lending. Servicers continue to retain a significant share of their customers who refinance, and in programs like the Home Affordable Refinance Program for underwater Fannie and Freddie borrowers, retail captures the overwhelming share of the business. Loan level data from the government-sponsored enterprises do reveal, however, that mortgage brokers are contributing to the increase in HARP lending. Brokers tend...[Includes two data charts]