Fannie, Freddie Helped by Special Servicers. While nonbank servicers are under scrutiny from a number of different parties, Fannie Mae and Freddie Mac said special servicers reduce credit losses compared with traditional bank servicers. In its latest earnings report, Freddie said it facilitated the transfer of servicing for $55.6 billion in unpaid principal balance to special servicers in 2013. “Some of these specialty servicers have grown rapidly in the last two years and now service a large share of our loans,” the GSE said.

A continued decline in GSE refinances, in concert with faltering purchase activity midway through the first quarter, helped contribute to an overall drop in the volume of single-family mortgages securitized by Fannie Mae and Freddie Mac in February. Fannie and Freddie issued $44.6 billion in single-family mortgage-backed securities in February, a 5.1 percent decline from January and a steeper 62.0 percent drop for the first two months of 2014 compared to the same period in the previous year.

Fannie Mae and Freddie Mac in 2013 wrapped up most of the massive amount of repurchase demands they made on legacy loans originated before 2008, but the GSEs are looking more closely at new production and, increasingly, servicer performance. Together, Fannie and Freddie reported a total of $37.87 billion in mortgage repurchases and other settlements of buyback claims, which typically means the lender indemnified the GSE for its losses.

The mortgage market has gradually shifted upstream since the collapse of the housing market and the painstakingly slow recovery, with big-ticket mortgages capturing a growing share of new originations, according to a new Inside Mortgage Finance analysis. Mortgages exceeding the traditional conventional loan limit of $417,000 accounted for 19.8 percent of new originations in 2013, up from 16.2 percent during the previous year. And with overall mortgage-production volume slumping over the second half of 2013, the jumbo share of new originations rose to 23.3 percent in the fourth quarter. The secondary-market agencies accounted...[Includes three data charts]

Bank and thrift holdings of adjustable-rate mortgages have increased significantly in recent years, according to an analysis by Inside Mortgage Finance, driven in part by originations of jumbo mortgages. Banks and thrifts held $647.42 billion in ARMs in portfolio as of the end of 2013, according to call-report data. The total ARM portfolio increased by 0.7 percent last year, the third annual increase in a row, while the aggregate bank and thrift retained portfolio of first-lien mortgages fell 3.0 percent. ARMs accounted for 37.1 percent of the bank/thrift mortgage portfolio at the end of 2013, compared to just 31.9 percent at the end of 2011. Lenders have to keep generating...[Includes two data charts]

If Fannie Mae and Freddie Mac are eventually liquidated, the federal government could reap between $170 billion and $234 billion in net proceeds, according to a new audit of the firms, but that doesn’t mean the junior preferred stockholders in the two will see a dime of that money. The newly released Johnson-Crapo mortgage finance reform bill provides no relief to investors in the junior preferred or owners of common stock in the two government-sponsored enterprises, leaving all liquidation proceeds to the U.S. Treasury, which owns the senior preferred shares. Over the past 18 months, several high-profile private-equity firms – Fairholme Capital, Pershing Square and Perry Capital, to name a few – have invested...

The private mortgage-insurance industry said it is pleased that the bipartisan agreement between Senate Banking Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Michael Crapo, R-ID, on housing finance reform recognizes the important role of private MI. The newly launched U.S. Mortgage Insurers said it supports Congress’ efforts to achieve housing finance reform, all of which recognize the importance of and the need for standard MI coverage on loans sold to Fannie Mae and Freddie Mac. Privately, MIs say...

The economic feasibility and perhaps the successful winding down of Fannie Mae and Freddie Mac may come down to how the government accounts for the federal budget impact of shuttering the two government-sponsored enterprises, noted experts this week at a Bipartisan Policy Center forum. In light of Fannie’s and Freddie’s federal conservatorship status and the resulting control by the Treasury Department, the two GSEs are “effectively part of the government” and their operations should be reflected in the federal budget, according to the Congressional Budget Office. The CBO has concluded...

The top Democrat and Republican of the Senate Banking, Housing and Urban Affairs Committee this week delivered their long-awaited mortgage reform bill which aims to put Fannie Mae and Freddie Mac out of business within a half-decade window, but with a couple potential leases on the lives of the two government-sponsored enterprises. In a rare Sunday filing, the legislation authored by Senate Banking Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, would set up a powerful new agency, the Federal Mortgage Insurance Corp., which could assume control of the GSEs within six months of enactment and begin writing new “catastrophic” mortgage-securities guaranties. Based on the bipartisan legislation introduced by Sens. Bob Corker, R-TN, and Mark Warner, D-VA last summer, the new bill adds...

W.J. Bradley Mortgage Capital announced a number of new jumbo mortgage products this week. Among the offerings is a loan with a 10 percent downpayment requirement for balances of up to $850,000.