The use of Federal Home Loan Bank advances by banks and thrifts continued to fall during the second quarter of 2011, with one top-three bank moving up a notch due to increased advance use on a year-over-year basis, according to the Inside Mortgage Finance Bank Mortgage Database.Banks and thrifts reported using a combined $341.1 billion in advances as of June 30, 2011, down 4.7 percent from the first quarter of 2011 and off 23.4 percent from the same period a year earlier.

Despite its earnest efforts to address the problem, the Federal Housing Finance Agency’s staff recruitment and retention shortfalls seriously threaten its effectiveness as the GSEs’ regulator, its official watchdog has concluded.The FHFA’s Office of Inspector General said in a report issued last week that the Finance Agency has too few examiners to ensure the efficiency and effectiveness of the GSE oversight program.

Between 2006 and early 2011, Fannie Mae’s regulator repeatedly tolerated delays by the GSE in establishing an acceptable and effective operational risk-management program despite repeated calls to do so, according to a report by the Federal Housing Finance Agency Office of Inspector General.

A report issued this week by the Federal Housing Finance Agency Office of Inspector General found preventable flaws in the FHFA’s oversight and approval of a $1.35 billion settlement between Bank of America and Freddie Mac in December 2010 which resolved most past, present and future repurchase demands on 787,000 loans.Fannie Mae made its own similar repurchase settlement with BofA for $1.52 billion that same month.The FHFA-OIG evaluation found the agreement was based on Freddie’s flawed review process and that a “lack of independent action by FHFA senior management may have led and could lead to significant losses” by the GSE.

The Federal Housing Finance Agency is seeking comments and suggestions as it prepares for an upcoming, mandated review and revision of its existing regulations.

A Federal Reserve analysis of Home Mortgage Disclosure Act data released last week suggests that the about-to-be implemented decline in conforming loan limits will have a minimal impact."Analysis of the 2010 HMDA data suggest that the number of loans affected by these limit changes is likely to be small,” noted the Fed report.

The average fee charged by Fannie Mae and Freddie Mac to lenders rose last year, while payments collected on the Home Affordable Refinance Program contributed to the GSEs’ bottom line, according to the Federal Housing Finance Agency.The third-annual FHFA study found that the average total guarantee fee charged by Fannie and Freddie on single-family mortgages was 26 basis points in 2010, compared to 22 bps in 2009. When HARP loans were excluded, the FHFA said the total average g-fee increased to 25 bps in 2010 from 21 bps in 2009.

Freddie Mac earlier this month issued new standards for mortgage modifications available to distressed homeowners as early as next month.

Upset at what they perceive as being kept out of the loop as the White House and the Federal Housing Finance Agency look to jumpstart the GSEs’ underperforming refinance program, House Democrats are dealing themselves into the process starting with a meeting with the FHFA’s head next week.Reps. Dennis Cardoza, D-CA, and Elijah Cummings, D-MD, are “tentatively scheduled” to sit down with FHFA Acting Director Edward DeMarco on Oct. 6 to discuss the lawmakers’ ideas on how to best improve the two-year-old Home Affordable Refinance Program, according to a Cardoza spokesman.

Preliminary results of a new evaluation program unveiled earlier this year by Fannie Mae indicate that some of the GSE’s servicers are satisfactorily meeting Fannie’s performance goals while others were below median performance levels during the first half of 2011.