FHFA Principal Reduction Pilot Program. A bill filed by Sen. Robert Menendez, D-NJ, before Congress left town last month would create a shared-appreciation mortgage program in which banks would reduce the mortgage principal for eligible underwater homeowners. Under the Preserving American Homeownership Act, S. 2854, the pilot programs – to be established by the Federal Housing Finance Agency and the FHA – would entitle banks to a portion of the increased value of the home when the market improves.

Fannie Mae and Freddie Mac securitized a total of $183.17 billion of single-family mortgages during the third quarter of 2014, continuing the improving momentum from the previous period, according to a new Inside The GSEs analysis. Combined mortgage-backed securities issuance for the two GSEs rose 29.1 percent from the second quarter, marking the second straight increase from the record-low levels set during the first three months of 2014. On a year-to-date basis, GSE volume was down 53.6 percent from the first nine months of 2013.

The GSEs securitized $100.30 billion of purchase mortgages during the third quarter, a 28.3 percent sequential gain.

Fannie Mae and Freddie Mac securitized a total of $183.17 billion of single-family mortgages during the third quarter of 2014, continuing the improving momentum during the previous period, according to a new Inside Mortgage Finance analysis and ranking. Combined mortgage-backed securities issuance for the two government-sponsored enterprises rose 29.1 percent from the second quarter, marking the second straight increase from the record-low levels set during the first three months of 2014. On a year-to-date basis, GSE volume was down 53.6 percent from the first nine months of 2013. Although purchase mortgages continued to provide most of the ammunition for Fannie/Freddie business, the GSEs securitized...[Includes three data charts]

In a surprise ruling this week, a federal judge in Washington, DC, dismissed claims by Fannie Mae and Freddie Mac shareholders challenging the Treasury Department’s 2012 “net-worth sweep” of nearly all the profits generated by the government-sponsored enterprises. Judge Royce Lamberth of the U.S. District Court for the District of Columbia ruled that Treasury and the Federal Housing Finance Agency are empowered by the Housing and Economic Recovery Act of 2008 to execute the “third amendment” of the preferred stock purchase agreement. The dismissal includes...

The Federal Housing Finance Agency is not on board with its Inspector General’s recommendation that the agency direct Fannie Mae and Freddie Mac to assess the cost and benefit of requiring lenders to get independent, third-party confirmation of their compliance with government-sponsored enterprise origination and servicing guidance. The IG audit noted that the Securities and Exchange Commission and the Department of Housing and Urban Development, as well as private MBS investors in the secondary mortgage market, already require annual, independent assurance of counterparty compliance. “The annual assertions and audits have helped...

Achieving simplicity would be nearly impossible and getting clarity is something that remains to be seen in the FHA’s proposed draft for identifying underwriting defects, said compliance experts. The FHA has asked for industry feedback on a draft single-family loan quality assessment methodology, which is part of the agency’s Blueprint for Access strategy announced earlier this year to expand underserved borrowers’ access to mortgage credit. The proposed methodology is based...

The vast majority of community banks plan to continue to offer mortgages even though increased regulation is limiting business, according to a survey conducted by the Conference of State Bank Supervisors. Rules from the Consumer Financial Protection Bureau remain a primary concern, although many community banks already offer loans outside of the standards for qualified mortgages. “Banks continue to see opportunity in residential mortgage lending but have a mixed view of non-QM lending,” according to the report jointly compiled with the Federal Reserve. “Assessing the ability to repay and QM standards against current exposures, bankers generally identified a low level of nonconformance, suggesting the rules may generally be in line with bank practices while still requiring significant changes in operations.” Some 64 percent of the 884 community banks surveyed said...

So, is now a good time to buy into Fannie Mae and Freddie Mac? It's a game not for the faint of heart.

However, a separate lawsuit filed by Pershing Square Capital Management in the U.S. Court of Federal Claims is unaffected by Judge Lamberth’s ruling.