Although Fannie Mae and Freddie Mac reported combined comprehensive income of $6.8 billion in the third quarter of 2014 – thanks in no small part to strong guaranty fee revenue – the two government-sponsored enterprises both said they’re keeping a wary eye on the precarious financial condition of private mortgage insurers. Fannie noted in its 10-Q filing with the Securities and Exchange Commission that although the financial condition of its primary MI counterparties approved to write new business has improved, there is still risk that they may fail to honor the GSE’s insurance claims. “If we determine that it is probable that we will not collect all of our claims from one or more of these mortgage insurer counterparties, or if we have already made that determination but our estimate of the shortfall increases, it could result...

Income documentation and other standards that have been in place since Fannie Mae entered conservatorship in 2008 will apply to the company’s new 3 percent downpayment product, and loan assessment by a private mortgage insurer will be crucial, according to a company spokesman. The spokesman said details will be announced shortly. Fannie Mae is working with the Federal Housing Finance Agency to design the government-sponsored enterprise’s revamped 97 percent loan-to-value product. Sources said previous requirements for a standard 97 LTV product, which Fannie offered until November 2013, are being considered. The FHFA announced...

Sources said previous requirements for a standard 97 LTV product, which Fannie offered until November 2013, are being considered.

HFA portfolio performance continues to strengthen, which will bolster future interest income.

The Fannie product also had less expensive mortgage insurance and allowed the borrower to cancel the policy once the LTV reached 80 percent of the home’s value.

Fannie and Freddie have been exploring the adaptation of alternative credit scores for months, but have yet to take action.

The MBS gain was lopsided: Ginnie MBS issuance jumped 10.8 percent from September to October, while Fannie Mae and Freddie Mac suffered declines.

New issuance of agency single-family MBS climbed for the eighth consecutive month in October, according to a new Inside MBS & ABS analysis and ranking. Fannie Mae, Freddie Mac and Ginnie Mae issued a total of $93.01 billion of new single-family MBS during October, up 2.1 percent from September. October production was the highest monthly volume for the market since October 2013, and reflected steady growth since new issuance bottomed out in March of this year. But the gain was...[Includes two data charts]

Meanwhile, Redwood posted $45.0 million of net income in the third quarter of 2014, almost triple of what it earned in 2Q.

As Fannie Mae and Freddie Mac continue to expand their credit-risk transactions, the two government-sponsored enterprises and their regulator should look to other ways to minimize credit risk, industry insiders told attendees of an Urban Institute/CoreLogic housing forum this week. In its most recent strategic plan for the GSEs, the Federal Housing Finance Agency is calling on Fannie and Freddie to reduce their exposure to risk by tripling the amount of credit-risk transfers they conduct on their single-family business from $30 billion last year to $90 billion in 2014. Mark Hanson, Freddie’s senior vice president, securitization, told...