Several more documents were released in relation to an ongoing GSE shareholder case out to prove that the government knew Fannie Mae and Freddie Mac were on the path to profitability at the time the Treasury sweep was put in place.The release came after a judge rejected the government’s appeal of an earlier ruling requiring it to turn over a slew of documents for which it had asserted various forms of privilege in Fairholme Funds vs. United States, et al. All of the latest documents are from 2012. They include a July 20, 2012, memo stating “thoughts on how to signal a plan to amend the preferred stock purchase agreements,” from Treasury...

Skepticism over Fannie Mae’s foray into the single-family rental market has been growing and some lawmakers are voicing their concern. Since announcing the $1 billion deal with Invitation Homes in January, trade groups have expressed anger over Fannie’s pilot program with the Blackstone Group subsidiary, even as Freddie Mac may be next to test the SFR waters. On Feb. 17, 10 Democratic Congressmen sent a letter to Federal Housing Finance Agency Director Mel Watt, asking him to reconsider the deal since it hasn’t been finalized yet. The pilot program is the first time that Fannie backed a large institutional investor. Invitation is the largest single-family rental operator in the U.S. and has a portfolio of about 50,000 homes that it acquires from foreclosures.

A prolonged conservatorship coupled with a change in leadership at the Federal Housing Finance Agency could shift priorities for Fannie Mae and Freddie Mac, according to the Government Accountability Office. The GAO said a potential priority change for Fannie Mae or Freddie Mac would only send mixed messages, creating uncertainties for market participants and hindering the development of the broader secondary mortgage market. In its 2017 biennial report released this month, the GAO discussed actions that need to be taken in order to resolve the federal role in housing finance. The need for leadership commitment by Congress and the administration to reform the system was one of the primary themes.

Sen. Mike Crapo, R-ID, newly elected chair of the Senate Banking, Housing and Urban Affairs Committee, said reforming Fannie Mae and Freddie Mac would likely happen in 2018, but he’s concerned about the divisiveness on Capitol Hill. During remarks at the Mid-Size Bank Coalition of America meeting last week, the senator echoed Treasury Secretary Steve Mnuchin’s comments and said that a housing reform bill would be a “high priority” and he doesn’t expect the administration to take unilateral action. Crapo said the atmosphere on Capitol Hill is more toxic than he’s ever seen, with constant pushback over President Trump’s election win. Analysts noted that this is the ultimate risk to housing finance reform, as bipartisan support is needed.

Despite a Feb. 21 ruling barring GSE shareholders from making illegal Treasury sweep claims, plaintiffs and speculators are keeping hope alive. In Perry Capital LLC vs. Treasury, the U.S. Court of Appeals for the District of Columbia put a stop to shareholders who have been arguing that the government is illegally confiscating GSE profits, citing language in the Housing and Economic Recovery Act of 2008. The Appeals Court notes: “We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review … We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against...

Fannie Mae and Freddie Mac ended 2016 with a bang when fourth quarter combined earnings totaled stellar results, nearly $9.9 billion, representing the best quarter of the year. Fourth-quarter earnings were largely driven by high gains in the fair market value of the GSEs’ hedges, which gained $10.2 billion on a combined basis. “Interest rates went up in the fourth quarter, therefore you saw an unusually large gain in the accounting,” Freddie CEO Donald Layton told Inside The GSEs. Both GSEs had quarterly earnings increases throughout the year. Fannie reported $5.0 billion in the fourth quarter, up from the $3.2 billion in the third quarter, and Freddie more than...

Mortgage balances, the largest component of household debt, rose during the fourth quarter of 2016 as more households took on new mortgage debt during the period, according to the Federal Reserve Bank of New York. The NY Fed’s latest quarterly report on household debt and credit said balances on basic household debt rose in the fourth quarter due partly to stronger, new extensions of mortgage credit. Specifically, mortgage balances shown on consumer credit ...

Distress in the housing market has an impact on the location and types of jobs individuals are willing to take, according to research by the National Bureau of Economic Research. During the most recent recession, distressed borrowers tended to apply for fewer jobs that required relocation and looked for lower-level positions, according to an NBER working paper by Jennifer Brown of the Sauder School of Business at the University of British Columbia and David Matsa of ...

Commercial banks and savings institutions reported a combined $5.479 billion in net income from mortgage-banking activity during the fourth quarter of 2016, according to a new Inside Mortgage Trends analysis of call-report data. The industry’s mortgage-banking income was up 5.8 percent from the third quarter, lifting the total for the year to $17.544 billion. That was down 4.6 percent from 2015. Bank of America ranked as the top earner in ... [Includes one data chart]

The homeownership rate fell for the 12th consecutive year in 2016, hitting levels last seen 50 years ago. While industry analysts expect that the homeownership rate will stop declining in the coming years, growth will likely be constrained. The annual homeownership rate in 2016 was 63.4 percent, according to the U.S. Census Bureau. That was down from a rate of 63.7 percent the previous year and from a peak of 69.0 percent in 2004. Frank Nothaft, chief economist at CoreLogic ...