MGIC Investment Corp. pumped $200 million into its ailing mortgage insurance operation, Mortgage Guaranty Insurance Corp., to increase its statutory capital and enable it to continue writing new business. The capital infusion is part of a survival strategy mapped out by the private MI company two years ago, with the concurrence of the Wisconsin Office of the Commissioner of Insurance (OCI), Fannie Mae and Freddie Mac. The strategy included a waiver from the OCI capital requirements as well as approvals by the two government-sponsored enterprises of MGIC’s subsidiary, MGIC Indemnity Corp. (MIC), as an...

Fannie Mae and Freddie Mac this week advised lenders that they will increase the guarantee fees they charge on all mortgage products by 10 basis points starting April 1, the result of a money-raising scheme enacted by Congress in the waning hours of the 2011 legislative session. A 10 bps point hike in fees charged by the government-sponsored enterprises may have a nominal effect at first, but the long-term implications are more significant. Politically, the increased fees will not be used to cover losses incurred by Fannie and Freddie – or even to repay the government’s costs incurred to...

Business was booming at Fannie Mae and Freddie Mac during the just-completed fourth quarter of 2011, with total single-family mortgage securitization jumping 47.4 percent from the previous period, according to a new analysis and ranking by Inside Mortgage Finance. The two government-sponsored enterprises pumped out a combined $261.2 billion in single-family mortgage-backed securities during the final three months of the year. That was the highest quarterly production level of the year, but it still came up 21.2 percent short of the volume generated....(Includes three data charts)

Congress has approved legislation mandating an FHA premium increase of 10 basis points, corresponding to an increase in fees charged by Fannie Mae and Freddie Mac for placing guarantees on cash flows to mortgage-backed securities investors. The increases were in the Temporary Payroll Tax Cut Continuation Act of 2011, which was approved by the House on Dec. 23 by unanimous consent and previously cleared by the Senate. In addition to raising guarantee fees charged by the two government-sponsored enterprises, the new law requires the Department of Housing and Urban Development to raise FHA annual...

President Obama this week moved to break a GOP blockade in the Senate by making a recess appointment of Richard Cordray to become director of the Consumer Financial Protection Bureau, a political maneuver that defies 20 years of precedent and may set the stage for a legal challenge. The Obama administration claimed that it is fully within its Constitutional authority to place the new director into his position, dismissing as a gimmick the pro-forma sessions Republicans used to block the nomination. A number of consumer groups came out in support of the appointment. The president’s allies in Congress were...

Fannie Mae, Freddie Mac and their federal regulator do not appear to have made much headway in convincing the mortgage industry to support a switch to a fee-for-service approach to servicing government-sponsored enterprise single-family mortgages. The vast majority of comments filed with the Federal Housing Finance Agency in response to its white paper on servicing compensation were from small and mid-sized lenders. The FHFA outlined two possible approaches, including its plan to pay servicers a flat fee of as little as $10 a month to service performing loans, with additional payments for...

There’s a very good chance the final disposition of securities fraud charges leveled by the Securities and Exchange Commission against six former Fannie Mae and Freddie Mac top executives could be determined at trial rather than by a pre-trial settlement, thanks in part to a recent adverse SEC court decision, according to one legal expert. On Dec. 16, the SEC filed suit in the U.S. District Court for the Southern District of New York, alleging that former Fannie and Freddie executives made material misstatements to the public, investors and the media about the two government-sponsored...

Bank of America reached a landmark $335 million agreement with the Department of Justice to settle allegations that Countrywide systematically discriminated against African-American and Hispanic borrowers during the housing boom, manipulating them into taking subprime loans when they were qualified for prime financing. It’s the largest settlement ever for a residential fair lending claim. The case also marks the first time the Justice Department has alleged and obtained relief for borrowers who were steered into mortgages on the basis of their race or national origin, a practice that placed...

The MGIC Investment Corp. has announced a $200 million capital contribution to its principal mortgage insurance provider, Mortgage Guaranty Insurance Corp., to enable it to continue writing new business and meet statutory capital requirements. The cash infusion was made as Fannie Mae’s approval of the MGIC Indemnity Corp. (MIC) as an eligible mortgage insurer expired on Dec. 31. A regulatory waiver of capital requirements issued by the Wisconsin Office of the Commissioner of Insurance (OCI) two years ago also lapsed on the same date. The MIC and the regulatory waivers are part of a strategy to...

There are new signs of life in the market for mortgage servicing rights, where observers suggest real estate investment trusts could become significant buyers and the government-sponsored enterprises are facilitating more transfer activity. Newcastle Investment Corp. recently announced a $44 million investment in excess mortgage servicing rights, done jointly with Nationstar Mortgage, a mortgage special servicer. Both companies are affiliates of Fortress Investment Group, a global investment management firm. Newcastle, a commercial mortgage real estate investment trust, acquired 65 percent...