Fannie Mae’s and Freddie Mac’s home retention activity declined for the most part during the second quarter of 2012, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 11.4 percent during the second quarter of the year to 190,315. Total loss mitigation for the first six months of the year fell 18.6 percent to 405,127 compared to the same six-month period in 2011.

There is vast room for improvement in how Fannie Mae and Freddie Mac manage their deficiency collections following foreclosure but it is the GSEs’ regulator that should provide more “guidance” about how to effectively pursue and collect from strategic defaulters, concluded the Federal Housing Finance Agency’s official watchdog this week.The FHFA Office of Inspector General’s latest audit found that in 2011, Fannie’s and Freddie’s vendors pursued 35,231 deficiency accounts, with a combined value of about $2.1 billion. Of this amount, vendors recouped some $4.7 million, a dismal recovery rate of 0.22 percent.

The legal backlog of cases pending against the GSEs and former company officials got a little shorter following the recent dismissal of two separate federal lawsuits against three defendants. A federal judge in Washington this week dismissed a long-simmering class-action lawsuit against Fannie Mae’s former Chief Financial Officer Timothy Howard brought by investors hoping to recover damages.Two Ohio pension funds – the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio, filed suit in 2004 related to a $6.3 billion overstatement of earnings against Fannie and three former GSE executives, including CEO Franklin Raines.

The Federal Housing Finance Agency is looking for feedback on a proposed advisory bulletin which would set forth standards to guide FHFA staff in its supervision of secured lending to insurance company members of the 12 Federal Home Loan Banks.The Finance Agency’s advisory bulletin on insurance company collateral, published in the Oct. 5 Federal Register, noted that lending to insurance company members over the last several years has come to represent “an increasingly larger portion” of FHLBanks’ overall business, with several Banks actively targeting this member segment.

Fannie Mae and Freddie Mac have released new guidelines designed to bring more of the two GSEs’ servicing requirements into alignment. The updated policies, both issued Oct. 3, focus on aligning contracts and the enforcement of remedies with seller/servicers in compliance with a Federal Housing Finance Agency directive. “The requirements announced in this bulletin build on the success [of previous announcements], and through our work with Fannie Mae, provide servicers with greater clarity, consistency and transparency across the enterprises on how servicer performance will be measured,” explained Freddie in its announcement.

A federal appeals court has refused to suspend proceedings in the case brought by the Federal Housing Finance Agency against one of the non-agency mortgage-backed securities issuers and underwriters for allegedly misrepresenting the deals that were sold to Fannie Mae and Freddie Mac. A three-judge panel of the Second Circuit Court of Appeals earlier this month made short work of rejecting the motion by UBS Americas to put the suit on hold while the appeals court hears UBS’ appeal of a lower court’s decision not to dismiss the case. “Upon due consideration, it is hereby ordered the motion is denied,” the judges ruled in their terse one-sentence Oct. 1 order.

Mortgages originated by lenders’ retail production programs accounted for 60.7 percent of single-family loans securitized by Fannie Mae and Freddie Mac during the third quarter of 2012, according to a new Inside Mortgage Trends analysis. Although many lenders have made strategic choices to focus on retail and scale back or abandon the wholesale market, a key factor in the dominance of retail originations was the heavy volume of refinance lending. Servicers continue to retain a significant share of their customers who refinance, and in programs like the Home Affordable Refinance Program for underwater Fannie and Freddie borrowers, retail captures the overwhelming share of the business. Loan level data from the government-sponsored enterprises do reveal, however, that mortgage brokers are contributing to the increase in HARP lending. Brokers tend...[Includes two data charts]

The Federal Housing Finance Agency’s five-year strategic plan aims to develop a “new system” for recording mortgages electronically and assuming custodianship of mortgage documents but is curiously silent about the role the Mortgage Electronic Registration System would play in a future revamped secondary mortgage market. The new system is among many initiatives and strategies outlined in the FHFA’s recently issued updated strategic plan for 2013-2017. The plan builds on an earlier plan for the conservatorships of the government-sponsored enterprises released in February. As part of building a new infrastructure to replace the GSE model, the FHFA said...

Just two institutions – Fannie Mae and Freddie Mac – end up securitizing the vast majority of conventional home loans, but a large universe of lenders deliver a significantly diverse supply of loans to the government-sponsored enterprises. A new Inside Mortgage Finance special report based on loan-level securities disclosures reveals that 1,848 different institutions delivered single-family mortgages to the two GSEs during the third quarter. They ranged in size from Wells Fargo, which delivered nearly a quarter of mortgages securitized by Fannie and Freddie during the period, to Wisconsin-based Universal Mortgage Corp., which sold one small $39,000 loan to Fannie during the period. The report, GSE Seller Profile: 3Q12, shows...

Unanticipated complications with the Dodd-Frank Act appear to have caused Fannie Mae and Freddie Mac to miss a Sept. 30 deadline set by the Federal Housing Finance Agency to initiate risk-sharing transactions with non-agency investors. However, FHFA officials said they continue to work with the government-sponsored enterprises on the issue. “Risk sharing is a complex process that requires time to assess market opportunities, structural considerations, make operational changes, and develop proper risk metrics and controls,” an FHFA spokesman said. “We are moving forward steadily and expect to continue making progress in the coming months.” FHFA officials would not comment...