The Federal Housing Finance Agency Office of Inspector General took the FHFA to task this week for what the OIG considers the agency’s lax supervision of Freddie Mac’s relationship with its servicers. Specifically, the FHFA has not clearly defined its role regarding servicers, sufficiently coordinated with other federal banking agencies about risks and supervisory concerns with individual servicers, or timely addressed emerging risks presented by mortgage servicing contractors.

The Federal Housing Finance Agency’s hands-off approach to regulating Freddie Mac’s relationship with servicers is a problem, according to a new report from the regulator’s inspector general. While the FHFA has taken some steps, like its Servicing Alignment Initiative, the IG said that the regulator should be looking directly at the books of servicers and other counterparties, instead of taking the government-sponsored enterprises’ versions of events. The regulator’s ability to keep track of the GSE servicer risk might be “impaired by its lack of direct access to servicer books and records relating to the...

Bank of America had already been dialing back its mortgage deliveries to Fannie Mae, along with declining overall production volume, before the company unexpectedly announced last week it has stopped sales to the government-sponsored enterprise altogether. But according to reports, a top Fannie official said the GSE acted first to end the relationship in frustrations with the bank’s delays in resolving repurchase issues. BofA said disputes over repurchases were one factor leading the bank to stop selling most single-family mortgages to Fannie, although the company also cited an inability to renegotiate...

Freddie Mac is reportedly crafting its own plan with institutional mortgage-bond investors to sell off hundreds of distressed homes owned by the government-sponsored enterprise, independent of a current government proposal to unload GSE real estate owned properties. According to Reuters, Freddie’s plan would allow investors to individually choose the properties they want to purchase rather than sell the homes in discounted bulk packages, like the plan that’s spearheaded by the Federal Housing Finance Agency. However, just as with the government’s plan, Freddie would secure a special line of...

Some 42 months into the government conservatorship of Fannie Mae and Freddie Mac “with no end in sight,” the GSEs’ regulator has planned out the two companies’ next steps but it says Congress needs to have the last word as to the final fate of Fannie and Freddie. Federal Housing Finance Agency Acting Director Edward DeMarco this week dispatched his “strategic plan” to House and Senate leaders in which the Finance Agency outlines the next phase of conservatorship for the GSEs while issuing a call to action to lawmakers.

Bank of America late this week announced it would stop selling new mortgages to Fannie Mae in the wake of an ongoing dispute with the GSE over repurchases.In its quarterly filing with the Securities and Exchange Commission, BofA said starting this month, it will no longer place non-Making Home Affordable program refinance first-lien mortgage products into Fannie mortgage-backed securities.BofA cited both the GSEs’ “increasingly inconsistent” repurchase requests compared to Fannie and Freddie Mac’s past conduct and the bank’s interpretation of its own contractual obligations, which BofA said has resulted in an increase in claims outstanding from the GSEs.

The Federal Housing Finance Agency needs to do more to oversee the legal expenses of Fannie Mae and Freddie Mac, though it has limited tools at its disposal to curtail GSE litigation, according to the FHFA’s Office of Inspector General. The OIG’s report, issued this week, noted that the two GSEs have racked up a significant number of billable hours, both before and after being placed in government conservatorship in September 2008, for their defense in lawsuits, investigations and administrative actions.

The housing GSEs continued to reduce their footprint in global debt markets during the fourth quarter of 2011, with new issuance and debt outstanding down from the previous year. Fannie Mae, Freddie Mac and the Federal Home Loan Banks issued a total of $2.51 trillion in debt last year, down 27.2 percent from 2010 levels, according to a new Inside The GSEs analysis of enterprise data. Issuance fell 26.7 percent from the third to fourth quarter, dropping to just $584.2 billion.

Fannie Mae’s general counsel is in the running to replace the company’s outgoing CEO, Inside The GSEs has learned, but a promotion is by no means assured as the GSE is casting a wide net in search of a suitable replacement. A source familiar with the inner workings of the company confirmed a published report that Timothy Mayopoulos, Fannie’s chief administrative officer and general counsel, has the inside track among those candidates within the company seeking the job.

The massive legal action initiated by the Federal Housing Finance Agency last year on behalf of Fannie Mae and Freddie Mac against many of the nation’s biggest lenders is getting ready to face its first legal challenge, and the federal judge’s ruling will determine the scope and direction of the cases, experts say. The FHFA lawsuits seek tens of billions of dollars in damages for losses incurred by Fannie and Freddie on purchases of approximately $200 billion in residential mortgage-backed securities.