Fannie, Freddie Slashed CMBS Holdings in 2013. Fannie Mae and Freddie Mac continued to sell off their holdings of non-agency commercial mortgage-backed securities as the preferred strategy for meeting their regulator's demand that the two GSEs accelerate the reduction in their retained mortgage portfolios.The two GSEs reduced their CMBS holdings by 51.4 percent over the course of 2013, according to an analysis of year-end financial statements.

Higher guaranty fees and improving housing markets propelled Fannie Mae and Freddie Mac to banner profits during the fourth quarter of 2013 and for the year as whole. The two GSEs reported a combined 2013 net income of $133 billion, helped by significant nonrecurring items related to deferred tax allowance valuation reversals, private-label residential mortgage-backed security lawsuit settlements, increased representation and warranty settlements, and sizeable decreases in loan-loss reserves.

Fannie Mae and Freddie Mac issued $44.6 billion in single-family mortgage-backed securities during the month of February, a 5.1 percent monthly decline and a 62.0 percent drop for the first two months of 2014. February’s decline was less steep than January’s 15.8 percent month-to-month fall off in MBS. Top-ranked Wells Fargo’s Fannie and Freddie securitization at $6.70 billion rose by 25.9 percent on a monthly basis but dropped 71.9 percent year-to-date.

Non-agency mortgage lending staged a minor revolt in 2013, reversing two years of increasing domination of the market by Fannie Mae, Freddie Mac and Ginnie Mae. The only growth spots in the mortgage market last year were in jumbo originations and home-equity lending, according to a new ranking and analysis by Inside Mortgage Finance. Jumbo production surged 20.9 percent from 2012 levels to an estimated $272 billion – the strongest output for the sector since 2007. Home-equity lending was...[Includes two data charts]

The Obama administration is asking Congress for authority to charge FHA lenders an “administrative fee” to help pay for improvements to the FHA quality assurance program. FHA wants to build a new quality assurance framework that will provide lenders more clarity about the agency’s expectations regarding the loan production process, said FHA Commissioner Carol Galante during a media briefing on provisions in the administration’s fiscal 2015 budget proposal that affect the Department of Housing and Urban Development. The idea is...

The Department of Justice is investigating PNC Financial Services Group and Bank of America in connection with their FHA-related mortgage lending practices, the two financial institutions disclosed in filings with the Securities and Exchange Commission. PNC said it has received subpoenas from the U.S. Attorney’s Office for the Southern District of New York seeking information relating to National City Bank’s lending practices in connection with FHA-insured loans as well as the origination of non-FHA loans and their sale and securitization. Another subpoena was issued...

GOP senators recently dispatched a letter to FHFA Director Mel Watt, countering a plea signed by 33 Democrats in January calling on the agency director to immediately authorize GSE funding to the National Housing Trust Fund and the Capital Magnet Fund.

Prospect Mortgage had roughly $975 million in committed warehouse lines at yearend. Its three largest providers include UBS Securities, Bank of America/Merrill Lynch and Fannie Mae.

In a rambling, 6-page letter sent to the GSE’s board, Fairholme Managing Member Bruce Berkowitz claims Fannie Mae’s equity securities are now valued by the market at $36 billion.

The Federal Housing Finance Agency ordered the two GSEs to sell at least 5 percent of their “less-liquid” mortgage assets, meaning whole loans and non-agency securities. CMBS are arguably the most liquid of these.