The Obama administration noted this week that it is less than keen on the idea of taking up an outgoing Democrat senator’s call to end the six-plus year conservatorships of Fannie Mae and Freddie Mac. Last week, Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, suggested the GSEs’ conservatorship be ended if legislative reform is not forthcoming.

Recent court rulings in Washington, DC, and Nevada allowed foreclosures brought by homeowner associations over unpaid dues to extinguish mortgage liens, increasing the risk of loss for investors in non-agency MBS and single-family rental securitizations, according to Moody’s Investors Service. Although both jurisdictions are relatively small in the grand scheme of things, other courts could adopt the same interpretations, the rating service said. Nevada has already seen some 1,000 similar cases, and more homeowner and condo associations are like to bring similar lawsuits. In Nevada, the court decided...

The most significant blockages to the return of a healthy and sustainable non-agency residential MBS market in the United States are low volume issuance, regulation, weak AAA demand and missing structural reforms, according to top market professionals. “What’s holding back the recovery?” asked Rui Pereira, managing director at Fitch Ratings, during a panel discussion at a residential MBS reform symposium sponsored by the Structured Finance Industry Group and Information Management Network in New York City earlier this month. “Other sectors have rebounded and we’re starting to see new asset classes emerge. And yet, we’re seeing very little momentum in our market. So the question is, what’s stalling the RMBS recovery?” In the run-up to the discussion, Pereira polled...

Two large banks got a break recently as the Securities and Exchange Commission agreed to grant penalty relief to one bank while a New York federal judge dismissed certain claims against the second bank because they were overly speculative. In the first case, the SEC cleared the way for Bank of America to close a $16.7 billion global settlement after SEC commissioners voted to waive additional sanctions that would have taken effect when the settlement is entered into court, according to a report by Bloomberg. The commission agreed...

The development of a common securitization platform for Fannie Mae and Freddie Mac and the progression of a single government-sponsored enterprise security remains an “important priority” for the Federal Housing Finance Agency over the next year, according to the FHFA. The GSE conservator noted in its “2014 Performance and Accountability Report” and the FHFA’s revised “Strategic Plan: Fiscal Years 2015-2019,” both issued last week, that the project is proceeding with deliberate speed. “Most of the software needed for the platform’s core functionality has been put...

The National Flood Insurance Program has been great in providing federal flood insurance coverage to homeowners in high flood-risk areas, but the huge losses incurred by the program during Hurricane Katrina and super-storm Sandy indicate it is time to shift the risk to the private sector, according to industry experts. During a hearing on flood insurance legislation by the House Financial Services Subcommittee on Housing and Insurance last week, experts urged lawmakers to stop funneling all flood risk through the NFIP and open the door to private flood insurance providers. The hearing focused...

Financial services trade groups called upon federal banking regulators to reinstate the 100 percent risk-weighting for mortgage servicing rights and to implement other changes as they move forward with the new Basel III risk-based capital rules. In a recent joint letter to bank regulatory agencies, the Mortgage Bankers Association, the American Bankers Association and the Independent Community Bankers of America warned that inaction could seriously affect the availability and cost of mortgages to consumers. The trade groups believe...

The Federal Housing Finance Agency this week said that conforming loan limits for Fannie Mae and Freddie Mac in 2015 would remain at current levels in most markets. Some 46 counties will get...

The Uniform Law Commission’s latest proposal for a model state act that would regulate foreclosure practices as part of an overlay on current state laws is deeply flawed, according to large servicers represented by the Consumer Mortgage Coalition. In a comment letter submitted to the ULC’s Home Foreclosure Procedures Act Committee last week, Anne Canfield, executive director of the CMC, said the draft HFPA could prompt foreclosure delays and would create new assignee liability. The ULC’s committee on the proposed foreclosure law has been working...

Mortgage servicing compliance is about to get even more complicated as the Consumer Financial Protection Bureau late last week proposed changes to its mortgage-servicing regulations on loss mitigation, force-placed insurance disclosures, borrowers in bankruptcy and a host of other matters. On loss mitigation, the bureau is proposing that servicers would have to meet its requirements “more than once in the life of a loan” for borrowers who become current after a delinquency. However, the rule is not clear how many times this could occur over the life of the mortgage. Next, the bureau wants...