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.

Bank of America this week announced that it is sharply curtailing its mortgage business with Fannie Mae, partly because of differences over buyback demands. The company said it has stopped selling Fannie purchase-money mortgages and refinance loans that are not originated under the Home Affordable Refinance Program. The problem, BofA said, resulted from a mutual decision by the bank and the government-sponsored enterprise not to renew a delivery contract that allowed the bank to sell loans to Fannie efficiently. “While we continue to have a valid agreement with Fannie Mae permitting the delivery of...

A bill proposed by a ranking Senate Democrat would permit underwater borrowers, including those with Fannie Mae- and Freddie Mac-backed loans, to reduce their loan principal through a federal shared mortgage-appreciation program. The Preserving American Homeownership Act, S. 2093, would establish a program through which the banks would write down the principal balance of a mortgage to 95 percent of the re-assessed value of the home.

A bill filed in the Senate earlier this month would authorize Fannie Mae and Freddie Mac, as well as Federal Deposit Insurance Corp. member banks, to enter into long-term leases to permit families to stay in their homes while also easing the pressure of unsold foreclosure inventory on the housing market. The Home Act, S. 2080, sponsored by Sen. Dean Heller, R-NV, would afford banks and the GSEs the option of leasing their real estate-owned (REO) properties for up to five years, with the additional prospect of selling the house to the renter once the rental lease runs out.

Fannie Mae and Freddie Mac have made far fewer repurchase demands on loans sold to the GSEs over the past three years, but their regulator says the enterprises will continue to push lenders to buy back defective loans. A new Inside the GSEs analysis of repurchase activity by the GSEs reveals that the share of loans subject to buyback demands slowed to a trickle in 2009, when just 0.25 percent of mortgages purchased or securitized by Fannie and Freddie were subject to such requests.

The already formidable task of replacing the outgoing CEOs at Fannie Mae and Freddie Mac got a little harder this week following swift congressional action to cut compensation levels at the GSEs down to size.Both the House this week and the Senate have approved by overwhelming margins the Stop Trading on Congressional Knowledge Act of 2012, which would bar members of Congress and congressional staff from using non-public, inside information for private gain.While the House version of the STOCK Act is weaker than the Senate’s, both versions retained an amendment sponsored by Sens. John McCain, R-AZ and Jay Rockefeller, D-WV, to prohibit Fannie and Freddie executives from receiving multi-million dollar bonuses while the GSEs remain in federal conservatorship.