Expect the $11 trillion residential mortgage market to continue struggling to find its footing as market watchers anxiously await for an improved economy and employment picture to revive the sector from recession-induced stupor, according to the Aite Group. Although the residential mortgage market will “eventually” come back as the economy improves, the ease and speed with which the mortgage-backed securities market recovers is highly dependent on the structural and regulatory forces governing MBS securitization, particularly as it relates to ...

Debt issuance for Fannie Mae, Freddie Mac and the Federal Home Loan Banks declined during the first three months of 2011, while Freddie recorded an increase in new debt in the first quarter.The GSEs collectively issued $707.6 billion in new debt during the first quarter, a 9.9 percent decline from the previous quarter, while total GSE debt outstanding at $2.222 trillion declined 1.8 percent from the previous quarter.

Fannie Mae is sweetening the incentives for its HomePath properties to both homebuyers and real estate agents in an effort to hasten the sales pace of the GSE’s real-estate owned inventory.Through Oct. 31, Fannie is offering homebuyers up to 3.5 percent of the final sales price to put toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,200 bonus under the incentive plan.

The “very conservative terms” of the “qualified residential mortgage” definition proposed by federal regulators, taken together with the risk-retention requirements, the premium capture rule and other provisions, will provide a “significant and undue competitive advantage” to the GSEs over private-market mortgage-backed securities participants, according to the American Securitization Forum.In comments submitted to regulators on the proposed rule earlier this month, the ASF said that securities guaranteed by the GSEs will be able to be securitized free from the risk-retention requirements. This would result in the non-QRM loans that back such securities having lower costs to borrowers and more attractive terms than similar loans offered by private-market participants.

Fannie Mae is loosening its loan modification requirements regarding “imminent default” by changing its requirements for evaluating a borrower’s financial condition for consideration of a loan modification.According to Announcement SVC-2011-06, the GSE’s revised policy would make the Home Affordable Modification Program less stringent by including non-HAMP modification evaluations for borrowers who are either current or in default but less than 60 days delinquent.

A federal judge in Washington dismissed a class action lawsuit over the Home Affordable Modification Program this week, ruling that a group of New York homeowners lacked the standing to sue their mortgage servicer, as well as Fannie Mae and the Treasury Department.

Four more executives have been handed down jail terms for their role in a $2.9 billion fraud scheme that defrauded Freddie Mac, among others, and contributed to the failures of Colonial Bank and Taylor, Bean & Whitaker.

There is a huge disconnect between some members of Congress and the reality of the private market, that broad investor appetite for non-agency mortgage-backed securities is unlikely to rebound anytime soon, according to panelists at the American Securitization Forum annual conference. “Once you figure out how to get the government sector out of the market, [the belief is that] the private sector will step in and pick up all of that slack, and therefore they will do...

The controversial Consumer Financial Protection Bureau plans to hit the ground running when it officially opens its doors for business July 21, whether or not the agency has a director in place. Steve Antonakes, assistant director for large bank supervision at the CFPB, told industry executives last week that the agency is ready to begin conducting “point-in-time” examinations of banks with more than $10 billion in assets, exams that will last anywhere from four to 12 weeks, based on the size and complexity of the institution. A clean exam means...

The volume of home-equity loans outstanding dropped to its lowest level since 2005 and new production continued to slow in early 2011, but there are some signs that the HEL market may be touching bottom. The Federal Reserve reported that $925.3 billion of home-equity lines of credit and closed-end second mortgages were outstanding as of the end of March, down 2.6 percent from the fourth quarter. That was the lowest outstanding balance of home-equity loans since the fourth quarter of 2005. New HEL originations fell...[Includes two data charts]