Although Freddie Mac’s official watchdog found the GSE’s review process of servicer reimbursement claims to be “generally effective,” some tens of millions of dollars could be saved by scrutinizing servicer payments for costs incurred on loan defaults. According to an audit issued last week by the Federal Housing Finance Agency’s Inspector General, Freddie reimbursed 460 of its servicers $1.4 billion in 2013 but identified and denied $126 million in what the IG calls “erroneous” claims. The IG noted that Freddie’s top 10 servicers, relative to total reimbursements, accounted for 87 percent of all reimbursements made by Freddie in 2013.

Bank of America this week launched an appeal to overturn a jury verdict that found it liable for thousands of bad mortgages sold by Countrywide leading to a $1.27 billion judgment. U.S. District Court Judge Jed Rakoff levied the judgment in July after a New York jury last fall found the Charlotte, NC-based bank liable for fraud over a Countrywide program known in the industry as “the Hustle.”

The Mortgage Bankers Association is pushing back against proposed “costly and expensive” recommendations by the Federal Housing Finance Agency’s official watchdog that would likely not done much to prevent a multi-billion fraud scheme against the GSEs. The report by the FHFA’s Inspector General said regulators, counterparties and investigators missed the swindle perpetrated by the now-defunct Taylor, Bean & Whitaker Mortgage because they ignored various red flags.

HSBC Holdings is headed for trial later this month, absent a deal, after a New York federal judge rejected a last ditch effort by HSBC and Nomura Holdings to toss their mortgage-backed securities suit brought by the Federal Housing Finance Agency. U.S. District Judge Denise Cote’s ruling reaffirmed earlier rulings that the Housing and Economic Recovery Act of 2008 extended the time that the FHFA could file claims against a host of big banks.

Fannie Mae’s and Freddie Mac’s regulator has proposed tougher GSE affordable housing goals for purchase mortgages in low-income areas. Issued last week by the Federal Housing Finance Agency, the proposal would increase some of the benchmark levels for Fannie’s and Freddie’s affordable housing goals through 2017, while also establishing new housing subgoals for low-income multifamily properties.

Fannie Announces Plans to Sell DC Headquarters, Office Consolidation. Fannie Mae told its employees last week that it plans to sell its iconic headquarters in Northwest Washington, DC, and consolidate its five area office locations into one over the next two to three years. Fannie, a ward of the government for six years, owns its headquarters at 3900 Wisconsin Ave., but leases other locations in the area. It also occupies 4000 Wisconsin Ave. The company has offices in Virginia, Texas and California. Employees outside of the Washington area will not be affected, a spokesman clarified.

Commercial banks and thrifts continued to reduce the amount of mortgage servicing they do on behalf of other investors during the second quarter of 2014, according to a new Inside Mortgage Trends analysis of bank call-report data. With declining interest rates during the period and the prospect of faster prepayments, most banks also wrote down the fair market value they placed on their mortgage servicing rights, the data show. Banks and thrifts serviced a total of ... [Includes one data chart]

There is nothing like a robust rebound in mortgage production activity to bolster mortgage banking profitability. New data from the Mortgage Bankers Association show that the average mortgage banking operation saw net income quadruple during the second quarter, jumping from a measly $342,000 net profit in the first three months of the year to $1.374 million. The MBA quarterly performance survey found that 81.5 percent of participating lenders reported positive pretax income ...

Prices paid for nonperforming residential loans have continued to rise this year, which is great news for sellers of distressed product, but not so good for buyers. In fact, there are signs that certain buyers are dropping out of the market because returns are getting too low for their tastes. One Midwest-based buyer of NPLs told Inside Mortgage Trends that he recently closed a fund that was banking his acquisitions because investment returns are now in the 9 percent range ...

Some of the features of the Private Mortgage Insurance Eligibility Requirements recently put out by Fannie Mae, Freddie Mac and the Federal Housing Finance Agency would probably increase costs and cyclicality in the mortgage and housing markets to an unnecessary degree, according to a new report by Moody’s Analytics and the Urban Institute. Study authors Mark Zandi and Cristian deRitis (Moody’s) and Jim Parrott (the Urban Institute) said the standards should succeed in ensuring that ...