Fannie Mae last week issued an update to its lenders describing the new process that the GSE has implemented to identify and monitor individual appraisers. According to Lender Letter LL-2013-10, Fannie reviews appraisal reports for patterns of discrepancies and inconsistencies. Using the appraisal data that it collects through the Uniform Collateral Data Portal, Fannie said it has developed a process that identifies appraisers whose work displays more egregious issues.

In between the Federal Housing Finance Agency’s announcement of a new guaranty fee increase and the Senate’s confirmation of a new FHFA director, a Manhattan federal judge last week quietly issued a ruling that permits the agency to proceed with its residential mortgage-backed securites lawsuits. In the summer of 2011, the FHFA filed suit against 18 big banks in connection with flawed mortgage securities Fannie Mae and Freddie Mac purchased between 2005 and 2007. A number of defendants in the case, including a host of individuals, argued in an appeal filed in August that due to a 2005 change in Rule 430B of the Securities Act of 1933, they should not be held liable in the case.

PNC Financial Services will pay Freddie Mac $89 million to put to bed all buyback liabilities on home loans sold to the GSE in the years leading up to the mortgage-market meltdown, the lender announced earlier this month. The settlement resolves certain PNC repurchase obligations for both existing and future claims for approximately 900,000 loans that were sold to Freddie between 2000 and 2008. The $89 million payout, less credits of $8 million, will also be used to compensate Freddie for any losses that the GSE incurred in the past or any other losses that may result in the future, said PNC.

The top Democrat and Republican of the Senate Banking, Housing and Urban Affairs Committee admitted last week they will not make their ambitious deadline of clearing a housing finance reform bill by the end of this year, but the senior lawmakers said they remain “bullish” on moving legislation to the Senate floor sooner rather than later in 2014. Speaking at a Bipartisan Policy Center event, Committee Chairman Sen. Tim Johnson, D-SD, blamed “a couple of curveballs,” including the 16-day government shutdown, for falling short of his and Idaho Republican Mike Crapo’s self-imposed deadline announced in September. He also noted his panel held 12 hearings on housing reform this year, including the final one last week.

The Federal Housing Finance Agency has taken a number of positive steps to enhance and improve its deficient examination capacity of Fannie Mae and Freddie Mac, but the agency is still falling short of an optimal solution, according a new report by the Finance Agency’s official watchdog. This week’s evaluation report by the FHFA’s Office of Inspector General updates a September 2011 OIG audit that dinged the Finance Agency for shortfalls in its examination program, in particular its shortage of qualified examiners. The FHFA’s examination program – targeted examinations, continuous supervision, supervisory analysis and remediation activities – is the primary means by which the agency supervises and regulates Fannie and Freddie.

A nearly decade-long class-action fraud lawsuit on behalf of Fannie Mae investors and the GSE’s accountant KPMG LLP has been put to rest following the approval of a federal court judge earlier this month. In papers filed with the U.S. District Court of the District of Columbia, Judge Richard Leon said he found the $153 million settlement and plan for distributing it among the more than one million class members was “fair, reasonable and adequate.” 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.

The American Civil Liberties Union and a Brooklyn-based advocacy group, the Center for Popular Democracy, have filed a Freedom of Information Act claim against the Federal Housing Finance Agency demanding that the regulator produce all agency records “pertaining to the use of eminent domain to purchase mortgages.” Filed in the U.S. District Court for the Northern District of California, the lawsuit seeks information regarding the FHFA’s relationship with big banks and mortgage-backed securities investors and whether such interests influenced the agency’s opposition. The suit was filed earlier this month on behalf of community housing advocates in California, New Jersey and New York.

The Federal Housing Finance Agency has issued guidance to Fannie Mae and Freddie Mac stating that it would like to review any transfer of mortgage servicing rights where 25,000 or more in loans are being sold, investment-banking officials told Inside The GSEs. Sales that entail MSR portfolios of under that amount will avoid FHFA scrutiny. Fannie and Freddie, as a technical matter, have control of the servicing rights to the loans they guarantee and contract out with mortgage firms to process the payments on a monthly basis.

The Federal Housing Finance Agency proposed this week to establish “loan-purchase” limits for the GSEs which won’t occur until next October at the earliest. The regulator and conservator of Fannie Mae and Freddie Mac is seeking comments regarding loan-purchase limits 4.0 percent below the statutory GSE loan limits. The FHFA said it is considering a $600,000 purchase limit in the highest-cost markets and a purchase limit of $400,000 in non high-cost markets.

Fannie Mae and Freddie Mac will drop the 25 basis point adverse-market fee that had been applied to all mortgages since 2008 as part of the Federal Housing Finance Agency’s three-pronged adjustment in the guaranty fee the GSEs charge lenders. The FHFA announced changes to GSE g-fees that will amount to an average increase of approximately 11 bps, to be implemented in March and April. Analysts at Barclays Capital said the effective g-fee on 30-year fixed-rate mortgages will be about 62 bps.