Leading Senate Democrats and Republicans have been moving cautiously to advance legislation to expand the Home Affordable Refinance Program, although industry observers say the odds are long the measure will see meaningful Congressional action before the legislative clock runs out. Senate Banking Committee Chairman Tim Johnson, D-SD, and Sen. Richard Shelby, R-AL, the committee’s ranking member, have been working on an agreement to ensure that the proposed amendments to the legislation in a markup would be strictly narrowed to making changes to HARP. However, Shelby is pushing to permit any provision on housing finance to be considered...

In an unusual move, the federal judge overseeing the Federal Housing Finance Agency’s massive legal action against many of the nation’s biggest MBS issuers has granted a defendant the right to appeal her denial of its motion to dismiss. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted permission to UBS Americas to go over her head to the U.S. Court of Appeals for the Second Circuit. UBS hopes the appellate court will reverse...

The gap between the performance and liquidity of Fannie Mae and Freddie Mac MBS continues to widen and a proposal to make their securities interchangeable is gaining traction among stakeholders. But unless a workable valuation solution is found, bridging that gap between the two government-sponsored enterprises will remain nearly impossible, said the Mortgage Bankers Association. Pricing differences between Fannie and Freddie have grown...

Despite warning lawmakers to avoid looking at Fannie Mae’s and Freddie Mac’s guarantee fees as a (mostly) untapped revenue stream to pay for pet projects, mortgage industry officials say they remain on high alert to repel raids from a cash-hungry Congress. G-fees on Fannie and Freddie single-family mortgage-backed securities have been edging higher over the past year and in April took a 10 basis point leap higher. While there is debate within the industry whether to hike or to hold g-fees as a way to further a post-crisis recovery, all agree that the funds the GSEs charge lenders must stay with Fannie and Freddie.

Despite indications of heightened risk that the Federal Housing Finance Agency initially missed, the Federal Home Loan Banks substantially increased their unsecured lending to foreign financial institutions in 2010 and 2011, particularly in Europe, according to a report issued this week by the FHFA’s official watchdog. The FHFA’s Office of Inspector General noted that unsecured lending by the FHLBanks swelled from $66 billion at the end of 2008 to more than $120 billion by early 2011, but declined sharply by year-end 2011, as the European sovereign debt crisis continued to worsen.

The Federal Housing Finance Agency should “expeditiously finalize” its long-awaited analysis as to whether Fannie Mae and Freddie Mac will be allowed to offer principal forgiveness modifications under the Treasury Department’s Home Affordable Modification Program, according to the Government Accountability Office. In a report issued late this week, the GAO reminded the FHFA that the Obama administration’s loan modification program, which would be used to implement any principal reductions, expires at the end of December 2013.

Fannie Mae’s and Freddie Mac’s conservator is pushing back in court against local government efforts to squeeze the GSEs for payments of real estate transfer taxes – taxes that are contrary to the companies’ Congressional charter and to federal law, according to the Federal Housing Finance Agency. Last week, the FHFA filed suit in the U.S. District Court for the Northern District of Illinois against the Illinois Department of Revenue and six counties led by DeKalb County that are trying to collect transfer taxes from Fannie and Freddie. The counties initiated litigation earlier in the week by filing a class-action lawsuit to compel the GSEs to pay hundreds of thousands of dollars in uncollected real estate transfer taxes from the past five years.

A federal judge earlier this month had ruled that the Federal Housing Finance Agency’s case against UBS Americas will serve as the “test case” in a series of lawsuits that FHFA has filed concerning failed residential mortgage-backed securities. However, in another ruling a week later, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted a motion by UBS to appeal her May 4 denial of the bank’s motion to dismiss on statute of limitation grounds. Judge Cote’s June 13 decision denied UBS’ request that it should not be the first of 17 cases to proceed because it was not a loan originator and it was not accused of fraud.

The Federal Housing Finance Agency’s Office of Inspector General said it wants to ensure that Fannie Mae, Freddie Mac and their regulator are making the most of their real estate-owned policies given the expected increase in REO activities in the years to come. The FHFA-OIG’s audit report issued earlier this month noted that between 2007 and the end of 2011, the two GSEs have nearly tripled their REO inventories to nearly 180,000 units and their related expenses to $8.5 billion. “Given the ongoing delays in the foreclosure process and the financial distress in which millions of American homeowners continue to find themselves, the enterprises are likely to face elevated REO inventories and costs for years to come,” said the OIG.

The Federal Housing Finance Agency would employ a new, more comprehensive examination rating system which would be used to inspect Fannie Mae, Freddie Mac and the Federal Home Loan Banks and the Banks’ Office of Finance under a proposed rule issued last week. The proposed new system, published in the June 19 Federal Register, seeks to implement a single risk-focused examination system for all three entities that would be similar to the “CAMELS” rating system used by federal prudential regulators for depository institutions.