Lawmakers on both sides of the aisle and both chambers of Congress are warming up the hot seat next week for the man in charge of the conservatorships of Fannie Mae and Freddie Mac as they demand answers following the firestorm surrounding bonus payments for top GSE executives.In advance of what is expected to be a heated set of hearings, Federal Housing Finance Agency Acting Director Edward DeMarco dispatched a letter to lawmakers late this week to provide his perspective after approving $12.8 million in bonuses for 10 Fannie and Freddie executives.

A bill that would create a legislative framework for a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank system, was introduced this week in the Senate, a counterpart to a long-standing covered bond bill awaiting final approval in the House.The United States Covered Bond Act, S. 1835, sponsored by Sens. Kay Hagan, D-NC, and Bob Corker, R-TN, is nearly identical to a House bill of the same name sponsored by Rep. Scott Garrett, R-NJ, and Carolyn Maloney, D-NY, H.R. 940.

Fannie Mae and Freddie Mac each lost much more in the third quarter of 2011 than during the previous three month period and more than one year ago as the two GSEs reported significant derivatives losses.On a combined basis, Fannie and Freddie lost $9.5 billion in the third quarter, compared to a $5.0 billion loss in the second quarter and $3.8 billion in losses during the same period a year ago.

It will be months rather than weeks before the Federal Housing Finance Agency and other government departments are ready to deploy a plan for bulk sales of the inventory of government-owned foreclosed properties, according to the head of the FHFA.Testifying before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises last week, FHFA Acting Director Edward DeMarco told members that with the long-awaited revision of the Home Affordable Refinance Program out of the way, focusing on the government’s ample real estate owned inventory is the “next priority.”

Congress should permit the conforming mortgage loan limits for Fannie Mae, Freddie Mac and the FHA to remain lower as attempts to restore the higher limit could do the mortgage market more harm than good, an expert says.The “emergency” high cost conforming loan limits enacted in 2008 for the GSEs and the FHA expired on Sept. 30, dropping the limit to $625,500 from $729,750.

A bill introduced in the Senate this week would “responsibly unwind” Fannie Mae and Freddie Mac and “end the dependence on the government for housing finance.” Sen. Bob Corker, R-TN, said he introduced the Residential Mortgage Market Privatization and Standardization Act to start a conversation on how to best to rebuild the mortgage finance market.

The private mortgage insurance industry, driven toward irrelevance during the first two years of the housing market collapse, is staging a quiet comeback in 2011. A new Inside Mortgage Finance ranking and analysis reveals that private MI activity in the third quarter rebounded to its strongest market share in three years, and accounted for 24.2 percent of new primary mortgage insurance written. While FHA volume dropped 6.2 percent from the second quarter, private MIs provided coverage for $22.01 billion in new mortgages, a gain of 38.6 percent. The increase in private MI activity outstripped...(Includes three data charts)

Fannie Mae and Freddie Mac reported similarly sour earnings results for the third quarter with both government-sponsored enterprises expressing concern about their growing risk exposure to struggling private mortgage insurance companies. Freddie noted in its 10-Q filing that “the financial condition of certain of our mortgage insurers continued to deteriorate” during the July-September period. Fannie sounded a similar alarm in its own earnings statement. “The already weak financial condition of many of our mortgage insurer counterparties deteriorated at...(Includes one data chart)

Despite buying back some $5.4 billion in mortgages during the third quarter of 2011, mortgage lenders made only a small dent in the huge number of unresolved disputes with Fannie Mae and Freddie Mac over representations and warranties. According to third-quarter financial reports from the government-sponsored enterprises, Fannie and Freddie still had a whopping $12.2 billion of outstanding repurchase claims as of the end of September. That was down only slightly from the $12.7 billion in unresolved buybacks at the midway point in the year. The GSEs reported that seller-servicers...(Includes one data chart)