The House Financial Services Committee this week passed legislation repealing a provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act that increased the liability of credit rating agencies for ratings they provide on asset-backed securities offerings. H.R. 1539, the “Asset-Backed Market Stabilization Act of 2011,” would restore Rule 436(g) is-sued by the Securities and Exchange Commission, which exempted nationally recognized statistical rating organizations, or NRSROs, from expert liability when they provide ratings for ...

Regardless of whether the White House and Congress come to a debt ceiling deal before the fast approaching Aug. 2 deadline, agency MBS are in for a rough ride, experts say. Last week, Moody’s Investors Service and Standard & Poor’s lit a fire under the debt talks and sparked widespread consternation throughout the MBS arena when they announced that each may cut the U.S. credit rating two double-A within three months if there isn’t a “credible” agreement to address the U.S. debt burden. Consequently, Moody’s placed on review for possible downgrade ...

Fannie Mae this week released a revised prospectus for its single-family MBS program that updates language on non-standard collection options such as biweekly payment plans, certain hybrid ARM pools and loan eligibility. The government-sponsored enterprise also expanded its discussion of representations and warranties provisions affecting its single-family MBS. In addition to requiring sellers to repurchase mortgages that breach the reps and warranties, Fannie said it is important for investors to consider that there are other mandatory and optional cases where loans may be ...

Regulators of MBS markets should use a variety of tools to address inverse incentives in securitization, encourage markets to improve transparency and increase document standardization, according to a report released by the Joint Forum of the Bank for International Settlements. In its “Report on Securitization Incentives,” BIS said incentives in securities markets were misaligned in the crisis and still are today. “The major incentives at play for originators/sponsors included funding diversification, funding cost, risk transfer ...

Two House lawmakers, one Republican and one Democrat, have introduced a bill that would postpone a planned reduction of the high-cost loan limits for Fannie Mae, Freddie Mac and the FHA due to take effect this fall.Late last week, Reps. John Campbell, R-CA, and Gary Ackerman, D-NY, filed H.R. 2508, the Conforming Loan Limits Extension Act, which would mandate a two-year extension to keep conforming loan limits at 2008 levels.

California continues to be the top source of new single-family mortgages for Fannie Mae and Freddie Mac even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an upcoming special report, GSE Market Profile: First Half 2011 by Inside Mortgage Finance Publications.

Following contentious debate at times with Democrats, House Republicans last week advanced another installment of six narrow bills that would further curtail GSE activities or increase oversight while in conservatorship.The mark-up by the House Financial Services Subcommittee on Capital Markets and GSEs brings the total number of GOP-backed bills to reform Fannie Mae and Freddie Mac awaiting the full committee’s consideration up to 14 so far.

Freddie Mac’s top lawyer is leaving the GSE after five years to join the law firm of SRN Denton as co-chair of the firm’s global Financial Institutions and Funds sector.

Bank of America’s staggering $13.2 billion net loss on its mortgage banking operations overwhelmed fairly stable performance by the rest of the industry during the second quarter, according to a new analysis of earnings reports from 13 lenders by Inside Mortgage Trends. Including BofA’s huge loss, the group posted an aggregate loss of $9.8 billion for the second quarter, drowning out a modest $2.9 billion profit during the first three months of the year. The landmine in BofA’s second quarter results was a $14.0 billion provision for ... [includes one data chart and one graph]

A bill that would limit the payment of legal fees for Fannie Mae and Freddie Mac executives accused of fraud has been sent back to the drawing board for some additional tweaking.