It may be too early to declare an end to the cycle of servicers marking down the value of their mortgage servicing rights, but a new Inside Mortgage Finance analysis suggests that some large banks began raising their valuations in the fourth quarter. Across the board, all of the nation’s top five servicers – Wells Fargo, JPMorgan Chase, Bank of America, Citigroup, and U.S. Bancorp – increased the asset value of their MSRs in the fourth quarter of 2012, even though none of them reported significant growth in the unpaid principal balance of home loans serviced for other investors. Wells Fargo, the nation’s largest servicer with a market share of almost 19 percent, saw...[Includes one data chart]

In the end, there were no earth-shattering surprises in the Consumer Financial Protection Bureau’s final rule on mortgage originator qualification and compensation, but the residential finance industry isn’t quite done digesting the myriad details of the 541-page regulation, which goes into effect a year from now. Among many things, the rule codifies the difference between bank and nonbank loan officers, requiring the latter to get tested on a regular basis, a distinction that does not sit well with certain factions of the mortgage banking and brokerage industries. “The point is...

The mortgage servicing industry is continuing to sift through the massive new mortgage servicing final rulemaking issued last week by the Consumer Financial Protection Bureau. But one week into the review process, it seems clear that the cost of compliance and any strategic advantage between players is going to vary company to company, based less on size of the entity and more on the degree to which servicers have read the tea leaves ahead of time and started to prepare. “The reality is that there is lots of work to be done as an industry, regardless of your size or your portfolio mix,” said Michael Waldron, a partner and practice leader of the mortgage banking unit at the Ballard Spahr law firm. On the heels of the recent settlement of top bank servicing obligations under the consent orders related to robosigning practices, there has been...

The federal judge in charge of overseeing the multiple lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac rebuffed yet another motion by one of the banks to shut down the legal action. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected a motion to reconsider her December decision allowing the FHFA to proceed on behalf of the GSEs with most of its fraud claims against Ally Financial. On Dec. 19, the judge denied most of Ally’s motion to dismiss, including the defendant’s request that the court strike the demand for punitive damages, finding there were sufficient factual allegations in the FHFA’s complaint to move forward with its fraud complaint.

With the official opening of the 113th Congress and the Obama administration’s second term to commence next week, the two key congressional committees overseeing mortgage and housing issues are reorganizing their membership rolls. But it remains to be seen whether lawmakers will be any more successful at advancing legislative GSE reform than during the previous two-year session. As expected, Rep. Jeb Hensarling, R-TX, has assumed the gavel of the House Financial Services Committee, replacing the term-limited former chairman Spencer Bachus, R-AL, who will remain on the committee as chairman emeritus. Rep. Gary Miller, R-CA, will serve as vice chairman of the committee, while Rep. Lynn Westmoreland, R-GA, will serve in the newly created position of committee whip.

Analysts at Keefe, Bruyette & Woods noted in a recent report they expect both Fannie Mae and Freddie Mac to sell their real estate-owned properties “more meaningfully” if the GSEs can do so at levels “that are in line with current carrying values on the companies’ balance sheets.” At the end of the third quarter, Fannie held approximately 107,000 REO properties, worth an estimated $16.1 billion, assuming a purchase price of $150,000 per property. Freddie held some 51,000 REOs, equivalent to $7.6 billion assuming the same purchase price. KBW observed that there is room for improvement in how Fannie and Freddie move their REOs. “We believe that the GSEs will be unwilling for political reasons to take meaningful upfront losses to sell REO properties, even if it makes longer-term sense from an economic perspective,” said KBW.

Over the past few weeks mortgage consultants have been discussing a potentially lucrative “request for proposal” issued several months ago that requires outside vendors to aid the Federal Housing Finance Agency in carrying out its “Strategic Plan” for taking the GSEs to the next stage in their evolution. But according to these consultants, interviewed by Inside The GSEs, the fate of this RFP has gone dark with the agency declining to discuss the contract or anything tied to it. An agency spokeswoman told IGSEs that not all agency RFPs are public. A check by IGSEs found that the regulator/conservator of Fannie Mae and Freddie Mac posted just one RFP last year, a project that requires education and training services for what’s called an “executive leadership training” program. The reason the strategic plan RFP has created some buzz in the industry is that it may involve asking a vendor how it might go about merging Fannie and Freddie. However, a copy of the RFP in question – obtained by IGSEs – mentions nothing about a merger of the two, and is worded so generally that it might entail just about any duties.

The Federal Housing Finance Agency should review the concerns of industry trade groups about Fannie Mae’s plans to reduce the cost of lender “force-placed insurance” and then facilitate a “collaborative resolution” that’s open and transparent, industry groups contend. In a letter to the FHFA earlier this month, the American Bankers Association warned that Fannie’s March 2012 request for proposal inviting insurance companies to compete for the GSEs lender-placed insurance business directly as a way to ensure a significant reduction in insurance costs is rife with unintended consequences to the industry. “The proposal, if adopted, effectively would allow Fannie Mae to pick winners and losers among insurers, would be potentially inconsistent with state insurance requirements and would dramatically alter existing servicing operations, contracts and costs,” noted the ABA. “Such a proposed major reform of the mortgage servicing market should be considered in the sunshine.”

A rejuvenated Mortgage Partnership Finance program helped its six participating Federal Home Loan Banks more than double the number of home loans funded in 2012, program officials announced this week. Last year, the FHLBanks of Chicago, Boston, Des Moines, New York, Pittsburgh and Topeka purchased $14.33 billion of loans from member banks, a dramatic increase from $6.99 billion in 2011.Introduced in 1997, the MPF provides member institutions a competitive alternative to selling to the GSEs or holding loans in portfolio and retaining all the risk.

The Federal Housing Finance Agency announced two key staffing changes this week, including the appointment of Sandra Thompson as deputy director of the FHFA’s Division of Housing Mission and Goals. Thompson will move from the Federal Deposit Insurance Corp. to the Finance Agency where she will oversee the FHFA’s housing and regulatory policy, financial analysis and policy research.She will join the FHFA in March after serving at the FDIC in various capacities over the past 23 years, most recently as director, Division of Risk Management Supervision.