It’s only a matter of time before the remaining big bank defendants settle lawsuits filed by the Federal Housing Finance Agency over billions in non-agency mortgage-backed securities sold to Fannie Mae and Freddie Mac in the years leading up to the housing crisis, predicts a legal expert. Last week, Bank of America agreed to a $9.3 billion settlement that covers its own dealings as well as those of Countrywide Financial and Merrill Lynch, which it acquired in 2008. The agreement covers some $57 billion of MBS issued or underwritten by these firms.

Whether by legislation or by regulation, a group of House Democrats want Fannie Mae and Freddie Mac to give unemployed homeowners a break by issuing a foreclosure moratorium. Last month, Rep. Matt Cartwright, D-PA, filed H.R. 4255, the Stop Foreclosures Due to Congressional Dysfunction Act, which would require the Federal Housing Finance Agency to establish a six-month moratorium on GSE-guaranteed mortgages held by homeowners who have lost their emergency unemployment compensation “due to congressional inaction.” The bill requires that borrowers must have been in good standing prior to losing their unemployment benefits in order to be eligible for the temporary forbearance.

The Federal Housing Finance Agency’s oversight of Fannie Mae’s and Freddie Mac’s pre-foreclosure inspection process can and should be enhanced by strengthening quality assurance and controls, according to a new audit by the agency’s Office of the Inspector General. The FHFA-OIG audit found potential fraud in property inspection reports ordered by the two GSEs. Among the findings: the property inspection reports – which are used for foreclosures – contained inaccurate information that conflicted with corresponding photographs.

Fannie Mae and Freddie Mac junior shareholders face an uphill battle in their lawsuits challenging the Treasury’s August 2012 “net worth sweep” that effectively allows Uncle Sam to confiscate all of the companies’ profits, warns a legal expert. Investors are challenging the amended agreements regarding the seniority of Fannie and Freddie preferred stock owned by the federal government over investors’ GSE preferred stocks. More than a dozen lawsuits filed against the government – led by hedge funds Perry Capital and Fairholme Capital Management – are pending in federal district court in Washington, DC, and in the Court of Federal Claims.

With housing finance reform unlikely to clear Congress in the near term even as Fannie Mae and Freddie Mac remain “highly leveraged” on a global scale, a pair of policy advocates are urging Treasury Secretary Jack Lew to trigger existing protective regulations under his discretion that would classify the two GSEs as systemic risks to the economy. American Enterprise Institute Fellow Alex Pollock and Thomas Stanton, author and former Financial Crisis Inquiry Commission staffer, petitioned Lew in a letter this week to act in his capacity as chairman of the Financial Stability Oversight Council and designate Fannie and Freddie as Systemically Important Financial Institutions.

Seniors Group Targets Johnson-Crapo Bill Supporters With Paid Media. A right-leaning seniors advocacy group has taken out television and radio ads in seven states to call out supporters of the Senate’s bipartisan proposal to overhaul Freddie Mac and Fannie Mae, labeling it “Obamacare for the mortgage industry.” The 60 Plus Association campaign targets seven senators for supporting a measure by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, arguing that the bill would wipe out GSE shareholders. Three Democrat and four Republican senators were named in the campaign.

Mortgage bankers reported sharp declines in profitability during the fourth quarter, and only a little more than half of them said they were profitable at all, according to the Mortgage Bankers Association’s latest performance report. The average pretax income reported by participating companies fell 58.9 percent from the third quarter to $681,000, the MBA said. Only 57.9 percent of the lenders said they had positive pretax income for the period. Back in the fourth quarter of 2012, 93.5 percent of lenders said they were profitable.And the average ratio of pretax income to equity shriveled to just 51 basis points in the fourth quarter, compared to 12.2 percent in the third quarter and 63.4 percent a year ago.

Fannie Mae and Freddie Mac at yearend wrapped up most of the massive amount of repurchase demands tied to their pre-2008 books of business, which likely means less business for law firms and companies that help lenders defend buyback demands. But Resolution Portfolio Management & Oversight sees the new buyback era as an opportunity, especially for boutique firms like itself. “A lot of our competitors are out of business,” said Andrew Henschel, RPM’s executive vice president. “Their business model was based on volume. We’re a boutique. If we don’t win, we don’t get paid.” Indeed, these are trying times for some due-diligence firms. Last fall, Allonhill LLC sold most of its assets to Stewart Lender Services. Then a few months later, Allonhill owner Sue Allon threw what was left of the firm into bankruptcy protection after...

Sales of vacation homes increased 30 percent in 2013 from the previous year with 62 percent of buyers using a mortgage to finance their purchase and the rest paying in cash for their new properties, according to a survey from the National Association of Realtors. The NAR’s 2014 survey of investment and vacation homebuyers revealed that 717,000 vacation homes were purchased last year, the most since 2006. Overall, survey results showed that home sales in the first half of 2013 saw stronger recovery in many local markets. These sales were spurred by low mortgage interest rates and affordable house prices. However, the recovery slowed in the second half of the year in many areas due to low housing inventory. The median sales price of a vacation home last year was $168,000, up 12.5 percent from 2012. It was the second year with a price...

Originations of purchase mortgages declined in the fourth quarter of 2013, and applications for purchase mortgages have been tepid in early 2014. While tight underwriting requirements could have played a role in the downward trend, industry analysts suggest that a number of other factors are also suppressing originations of purchase mortgages. Loan-level data on agency mortgages show a decline in underwriting standards for purchase mortgages during 2013, including an increase in average debt-to-income ratios and a decrease in average credit scores. The looser underwriting wasn’t enough to stave off declines in originations. Mark Fleming, chief economist at CoreLogic, said originations of purchase mortgages have been constrained in part by a lack of supply, not of loans, but of homes...