Fannie Mae and Freddie Mac will no longer purchase loans that are interest-only, loans with 40-year terms or loans with points and fees exceeding the thresholds of the Consumer Financial Protection Bureau’s “ability to repay” rule, the Federal Housing Finance Agency announced this week. The FHFA said it is directing the GSEs to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the CFPB’s “ability to repay” requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Fannie Mae and its former auditor KPMG LLP have agreed to pay $153 million to resolve a long-simmering class action lawsuit brought by investors seeking to recover damages, according to an announcement Tuesday by Ohio Attorney General Mike DeWine. Two Ohio pension funds – the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio – filed suit in 2004 related to a $6.3 billion overstatement of earnings against Fannie and three former GSE executives, including then-CEO Franklin Raines.

Fannie Mae hit an earnings home run in the first quarter while revealing that it has released $50.6 billion in “deferred tax assets,” an allowance that sets up a massive cash payment to the U.S. Treasury by the end of June. Fannie estimates that based on a net worth of $62.4 billion at March 31, it will have a dividend obligation to Treasury of $59.4 billion, a cash payment that appears all but certain. Following an edict from Treasury last summer, the GSEs cannot build retained earnings and can only maintain a small “buffer” of net worth. The rest of their earnings must be given to Treasury, which controls their preferred stock.

Fannie Mae and Freddie Mac are “on track” in their conservator-mandated effort to create a common mortgage-backed security securitization platform even as the GSEs also draft standard contracts and disclosures for the MBS market of the future, according to the Federal Housing Finance Agency. The “progress report” that the FHFA issued last week was more of an outline of public comments it has received so far on what the agency and the GSEs have already proposed on the scope, design and construction of a common securitization platform and the progress of a CSP prototype. “The design is deliberately flexible so that the long-term ownership structure may be adjusted to meet the goals and direction that policymakers set forth for housing finance reform,” the report said. “Importantly, FHFA plans on instituting a formal structure to allow for ongoing input from industry participants.”

A jump in production income during the first quarter spurred a sharp increase in profitability that more than made up for a downturn in servicing earnings for a group of 10 lenders, according to a new Inside Mortgage Trends analysis of earnings reports. The 10 companies, which accounted for nearly half of the mortgages originated in the first three months of 2013 and over 60 percent of capitalized servicing rights, reported a hefty $4.29 billion in production-related income ... [Includes one data chart]

The Federal Housing Finance Agency is calling for public comments to weigh in on its planned survey of borrowers as part of a joint effort with the Consumer Financial Protection Bureau to build and maintain a database of government mortgage information. The planned National Survey of Mortgage Borrowers will be a quarterly survey of recent first-time borrowers of single-family mortgages. “The survey questionnaire will be sent to approximately 7,000 new mortgage borrowers each calendar quarter and will consist of approximately 80-85 multiple choice and short-answer questions designed to obtain information about individual residential mortgage borrowers that is not available elsewhere,” explained the FHFA in its recent Federal Register notice.

Mortgage industry economists widely agree that loan origination volume is going to drop sharply in 2013 – and again next year – although there is some variation in when they expect the downturn to take hold. The consensus view of economists at Fannie Mae, Freddie Mac and the Mortgage Bankers Association is that new originations in 2013 will drop 13.6 percent from last year’s level, falling to $1.635 trillion. The consensus – a simple average calculated by Inside Mortgage Trends – predicts ... [Includes one data chart]

When Countrywide Financial Corp. chairman and CEO Angelo Mozilo gave then company president Stanford Kurland the heave-ho in the fall of 2006, little did Kurland know at the time that it would be the best thing to ever happen to him professionally. Six years later, Kurland sits atop a growing mortgage empire fueled by the activities of PennyMac Mortgage Investment Trust, a publicly traded real estate investment trust with a market capitalization rate just north of $1.5 billion. To boot ...

GSE principal reduction could end up saving the government money but its reach to additional distressed borrowers would be limited, according to a report by the Congressional Budget Office. Expanding Fannie Mae’s and Freddie Mac’s loan modification policy to include principal forgiveness under the current Home Affordable Modification Program would probably generate fewer than 60,000 additional modifications, concluded the CBO report published last week.

The overall picture for mortgage delinquency and foreclosure activity generally is continuing to improve, despite some bumps in the road in a number of states. The mortgage delinquency rate increased to a seasonally adjusted rate of 7.25 percent at the end of the first quarter of 2013 – up 16 basis points from the fourth quarter of 2013, but down 15 basis points from one year ago, according to the Mortgage Bankers Association’s latest National Delinquency Survey, released late this week ...