Both Fannie Mae and Freddie Mac retained their dominant shares of mortgage-backed securities with something of a slide during the second quarter of 2012, according to an Inside The GSEs analysis. The two GSEs issued a combined $273.9 billion MBS during the second quarter, a 10.2 percent decrease from the first quarter. Compared to the second quarter of last year, however, Fannie and Freddie saw an ample 76.8 percent increase in MBS issuance.

A federal appeals court has agreed to hear a rare appeal by one of the non-agency mortgage-backed securities issuers and underwriters being sued by the Federal Housing Finance Agency for allegedly misrepresenting the deals that were sold to Fannie Mae and Freddie Mac. A three-judge panel of the Second Circuit Court of Appeals accepted UBS Americas’ appeal to re-argue and reverse a lower court’s denial of the bank’s motion to dismiss the FHFA’s suit as time-barred under the Housing and Economic Recovery Act.The FHFA sued UBS in July 2011 on behalf of Fannie and Freddie, seeking damages and civil penalties on behalf of the government-sponsored enterprises under the Securities Act of 1933.

The Federal Housing Finance Agency violated federal law when it rolled back the Property Assessed Clean Energy program without going through the required notice and comment period, a California federal judge ruled earlier this month. U.S. District Judge Claudia Wilken’s Aug. 9 ruling held that the FHFA was not acting as conservator of Fannie Mae and Freddie Mac but as a regulator that had improperly exercised substantive regulatory oversight in violation of the Administrative Procedure Act when the agency put a stop to GSE involvement with PACE programs.“The FHFA’s directives on PACE obligations amount to substantive rule-making, not an interpretation of rules that would be exempt from the notice and comment requirement,” wrote Judge Wilken. “The notice and comment process must be followed.”

A New York federal judge has denied a motion by former Fannie Mae top executives to dismiss a civil action brought against them by the Securities and Exchange Commission concerning the company’s misrepresentations about its exposure to subprime and Alt A mortgages in the two years leading up to the GSE’s government takeover. On Aug. 10, U.S. District Court Judge Paul Crotty rejected the motion brought by former Fannie CEO Daniel Mudd, former Chief Risk Officer Enrico Dallavecchia and former EVP for Single Family Thomas Lund. The defendant trio argued that investors had sufficient information to form their own conclusions about the viability of Fannie’s subprime and Alt A portfolio.

Mortgage bankers reported a downturn in loan production income during the second quarter that was offset partly by improved results from their mortgage servicing businesses, according to a new Inside Mortgage Trends analysis of earnings reports. A group of nine major lenders that collectively accounted for 62.6 percent of total home loan originations during the second quarter posted a combined $4.11 billion in mortgage production income for the three-month period. That was down 15.0 percent from ... [Includes one chart]

Banks reported a modest decline in mortgage banking income during the second quarter of 2012, but the business continued to generate strong profits, according to a new analysis of call report data by Inside Mortgage Trends. Commercial banks, thrifts and bank holding companies reported a total of $7.91 billion in non-interest income from single-family mortgage banking activity during the second quarter. That was down 0.8 percent from the first three months of the year, but it still ranked ... [Includes one chart]

Historically low mortgages rates have fueled a prolonged refinancing wave that helped provide lenders with an important revenue source during the financial crisis. But as refinancing activity wanes and home prices begin to stabilize, lenders need to plan for the coming purchase market to stay competitive and continue growing revenue. In this regard, St. Louis-based Mortgage Returns helps mortgage companies, banks and independent mortgage banks prepare for the transition to a purchase-driven business ...

Lenders won a number of concessions from the Consumer Financial Protection Bureau last week when the regulator proposed rules for loan originator compensation. However, the proposal also includes significant provisions that would impact lender profitability and originator compensation. For firms currently offering compensation arrangements that would be prohibited by the proposal, the CFPB said its proposed prohibition on compensation based on transaction terms “may contribute to adverse selection ...

Nationstar Mortgage Holdings posted strong profits for the second quarter of 2012 due to the company’s expanding servicing portfolio and refinances of loans in the portfolio. The nonbank had $36.3 million in net income for the quarter even after taking a $20.9 million decrease in the fair value of its mortgage servicing rights. “The primary driver of profitability continues to be servicing performance,” said Jay Bray, CEO of Nationstar, during a call with investors last week to announce the company’s earnings ...

The Consumer Financial Protection Bureau late last week released a proposed mortgage loan origination regulation, and perhaps most notable is what’s not in it – a required flat fee – a decision likely to be embraced by mortgage lenders. In a conference call with reporters, bureau officials said that after consulting with industry representatives and community advocates, the CFPB concluded a flat fee proposal would not be in consumers’ best interests. The Dodd-Frank Wall Street Reform and Consumer Protection Act places...