A conservative, non-partisan public interest group has filed suit against the Federal Housing Finance Agency, claiming the FHFA has improperly denied the group’s request for documents relating to the Finance Agency’s decision to sue 17 financial institutions last fall on behalf of Fannie Mae and Freddie Mac over alleged misrepresentations of mortgage-backed securities.Last week, Judicial Watch filed its lawsuit in the U.S. District Court for the District of Columbia after the FHFA denied the group’s Freedom of Information Act request for documents related to the agency’s litigation. The Finance Agency argued that as private companies, FOIA requests do not apply to Fannie and Freddie.

The expanded Home Affordable Refinance Program barely got off the launch pad in December, but more recent data and anecdotal reports suggest that the revamped mission to help underwater Fannie and Freddie borrowers is flying higher in early 2012. Even as the government-sponsored enterprises were reporting a 5.0 percent increase in refinance activity in December, the number of new HARP loans declined by a whopping 35.8 percent from the previous month. HARP activity increased by 3.3 percent from the third to the fourth quarter of last year, but that was significantly...(Includes two data charts)

Walter Investment Management is looking to leverage its subservicing relationships with the government-sponsored enterprises and avoid bidding wars to grow its servicing portfolio, according to officials at the special servicer. The company handled an $86 billion portfolio at the end of 2011, predominantly subserviced for others and added $57 billion in servicing during the year, all on a subservicing basis. Some $750 billion in mortgages are currently in the pipeline to potentially be transferred to special servicers, according to Denmar Dixon, vice chairman and executive vice president at Walter. The loans include potential sales of mortgage servicing rights as well as subservicing opportunities ...

Dividend payments paid by Fannie Mae and Freddie Mac to the U.S. Treasury for its continued financial support held down the two government-sponsored enterprises during the fourth quarter as Freddie would have otherwise posted a profit, while Fannie narrowed its losses during the final three months of 2011. Freddie actually reported $619 million in net income during the fourth quarter of 2011, compared to the third quarter’s net loss of $4.4 billion, before having to repay $1.7 billion in preferred stock dividends to the government. Under the terms of the GSEs’ purchase agreement, the Treasury is entitled...

A Fannie Mae proposal to reduce the cost of lender-placed homeowner insurance might be great news for borrowers but not for insurance companies that underwrite the product, warned Moody’s Investors Service. While Fannie has not disclosed the full details of its cost-reduction proposal, the government-sponsored enterprise plans to place policies directly with insurance companies, rather than accept policies put in place by the mortgage lender. Last week, the GSE issued a “request for proposals” inviting insurance companies to compete for the GSE’s lender-placed business. The request is...

Fannie Mae has updated its premium recapture policy by establishing standards for remediation in cases where a lender exhibits a peculiar prepayment behavior. Under the current guide, Fannie Mae has the right to analyze MBS that have high levels of prepayments, including a review of the lender’s origination and refinancing activities to ensure compliance with the government-sponsored enterprise’s requirements. If a lender shows an unusually high level of prepayments, Fannie may restrict any refinancing practice that might inappropriately affect the prepayment pattern for Fannie mortgages...

The two sibling GSEs experienced a divergent earnings period during the fourth quarter of 2011, as Freddie Mac posted a quarterly gain, on paper anyway, while Fannie Mae announced losses, albeit at a slower pace, in a year that drove both companies even deeper into the red.Freddie posted net income of $619 million during the three month period ending Dec. 31, 2011, compared to a net loss of $4.4 billion during the third quarter. For the full year, the company reported a net loss of $5.3 billion, compared to a net loss of $14.0 billion for the full-year 2010.

A legislative effort to extend Fannie Mae and Freddie Mac’s guarantee fee hike beyond 2021 to pay for the Gulf Coast cleanup was averted this week following some behind-the-scenes lobbying, but industry insiders remain wary of future attempts by lawmakers to milk the GSEs for cash. An amendment to the Restore the Gulf Coast Act of 2011 would have used revenue generated from GSE g-fees to help pay for the continued clean up from the BP Gulf Coast oil spill. Sponsored by Sens. Mary Landrieu, D-LA, and Richard Shelby, R-AL, the bill would establish a trust fund paid for partly by fines levied against the oil company.

The Federal Housing Finance Agency is proceeding with its initiative to dispose of GSE and government-held real estate-owned properties even as some within the industry question whether such a wide-spread REO program is necessary. Last week, the FHFA announced the first pilot transaction under its REO initiative, which is targeted to the country’s “hardest-hit” metropolitan areas, including Atlanta, Chicago, Las Vegas, Phoenix and parts of Florida.

Fannie Mae announced this week it will soon implement changes to its Lender-Placed Insurance requirements by overseeing the “forced-placed” policies itself instead of allowing banks and other financial institutions to do so. In a departure from current practices, Fannie said it would solicit proposals from insurance companies for its LPI business in an effort to “significantly reduce costs” to homeowners, taxpayers and to the GSE itself.