Industry reaction to the FHFA IG report on nonbank and small lender risk was swift. Maybe Fannie Mae is better off having Countrywide as its biggest customer again?

The recent shift in direct mortgage sales by smaller and nonbank lenders has reduced Fannie Mae’s and Freddie Mac’s concentration risks, but the trend has led to an increase in counterparty credit risk, according to the Federal Housing Finance Agency’s official watchdog. The evaluation report issued this week by the FHFA’s Office of Inspector General said the regulator of the two government-sponsored enterprises needs to monitor Fannie’s and Freddie’s risk-management controls regarding smaller lenders and nonbanks. According to Inside Mortgage Trends, an affiliated newsletter, nonbank sellers accounted...

A new “middle ground” legislative proposal that would replace Fannie Mae and Freddie Mac with a beefed-up Ginnie Mae is getting high marks from industry observers, but lawmakers on both sides of Capitol Hill have no more appetite for housing finance reform this year. The Partnership to Strengthen Homeownership Act, H.R. 5055, sponsored by House Democrats John Delaney (MD), John Carney (DE) and Jim Himes (CT), would create a new Ginnie Mae mortgage-backed security for conventional mortgages. It would have the full faith and credit of the federal government while tapping private sector capital to absorb some of the risk. H.R. 5055 has...

"Buying loans from some nonbanks could damage the enterprises' reputations," the FHFA IG says.

“In essence, defendant asserts that the court should merely take its word that the documents – some of which defendant itself has not reviewed – are privileged,” wrote Sweeney. “This suggestion runs contrary to law.”

Private mortgage insurers that survived the housing market collapse are quietly gnashing their teeth over new eligibility rules proposed by the Federal Housing Finance Agency, which likely will cause some to reengineer their corporate structures and/or raise additional capital. The good news for the legacy firms – Genworth, Mortgage Guaranty Insurance Corp., Radian and United Guaranty – is that they have the financial ability to meet the new capital standards. The bad news – for this group and MI newcomers – is that the FHFA’s proposals would narrow the competitive gap between the private MIs and the FHA. One trade group official, speaking under the condition his name not be used, noted...

Year-to-date MBS issuance by Fannie and Freddie was down 60.9 percent from the first half of 2013.

Surprise: most of the growth by nonbanks has been by smaller mortgage bankers.

The agencies securitized $122 billion of purchase mortgages during the second quarter of this year, a 16.6 percent sequential increase.

New GSE repurchase requirements are now in effect, including the “MI stand-in” option, which Fannie defines as “the full mortgage insurance benefit that would have been payable under the original mortgage insurance policy if the mortgage loan liquidates.”