Lobbyists and analysts who track the market are unanimous on one key issue: GSE loan limits. From what we’re told, Watt will shelve any thought of lowering the Fannie Mae/Freddie Mac mortgage limit in 2014.

It is all but certain that the Federal Housing Finance Agency will soon have its first permanent and confirmed director since the agency’s inception, following the move late this week by Senate Democrats to invoke the “nuclear option” for presidential nominees. The Senate voted 52 to 48 to change its own rules to permit most executive and judicial nominees to pass by a simple majority vote.

A senior Obama administration official this week flatly rejected the notion of private investors purchasing the mortgage-backed securities business of Fannie Mae and Freddie Mac. White House Economic Advisor Gene Sperling noted while speaking at a Washington, DC, conference that the White House won’t get behind a $52 billion proposal by Fairholme Capital Management to purchase and spin off the GSEs’ insurance business.

A group of House Democratic lawmakers is warning the Federal Housing Finance Agency that prohibiting GSE access to municipalities that use eminent domain to restructure underwater mortgages would constitute illegal discrimination against minority homeowners. In a letter to FHFA Acting Director Edward DeMarco, a group of 10 House Democrats led by Minnesota Rep. Keith Ellison said Fannie Mae’s and Freddie Mac’s refusal to insure loans seized and rewritten via eminent domain would be illegal under the Fair Housing Act and violate credit discrimination laws.

The successor regulator to the Federal Housing Finance Agency should be immediately infused with the FHFA’s talent and resources upon inception rather than a potentially “confusing and inefficient “ five-year transition period where past and future regulators would co-exist, an FHFA official told lawmakers this week. Testifying before the Senate Banking, Housing and Urban Affairs Committee, FHFA General Counsel Alfred Pollard told senators that moving all employees to the new agency – or possibly renaming and empowering the FHFA as the proposed Federal Mortgage Insurance Corp. – would avoid a potential brain drain.

JPMorgan Chase twice in as many weeks announced multi-billion dollar deals to settle legal disputes with numerous parties – including Fannie Mae, Freddie Mac and their regulator, the Federal Housing Finance Agency – involving residential mortgage-backed securities. This week, the Department of Justice, along with other federal and state agencies – including the Federal Housing Finance Agency – reached a $13 billion settlement with JPMorgan, which acknowledged making misrepresentations about billions of dollars in MBS sold…

Whether, when or by how much the Federal Housing Finance Agency will direct an increase in Fannie Mae’s and Freddie Mac’s guaranty fees is fast becoming a political as well as a policy issue based on recent public calls by both industry and progressive advocacy groups. Last week, nine industry trade groups – including the American Bankers Association, the Mortgage Bankers Association and the Community Mortgage Lenders of America – dispatched a letter to the respective chairmen of the House and Senate Budget Committees.

The Federal Housing Finance Agency should direct Fannie Mae to strengthen its control over the GSE’s short sales, and review Fannie’s Streamlined Documentation Program to determine whether it should be available to borrowers seeking approval to short sell non-owner-occupied properties, according to the agency’s official watchdog. The audit released this week by the FHFA’s Office of Inspector General was based on a review of 41 short-sale transactions involving multiple Fannie servicers.

Freddie Mac announced last week that Arch Reinsurance will provide credit-loss insurance to the GSE on a pool of mortgages used in the company’s first non-agency risk-sharing transaction. The $22.58 billion pool was used to create tranches sold to investors as part of Freddie’s first Structured Agency Credit Risk transaction. Arch will cover up to $77.4 million in losses on certain tranches of the deal. The STACR deal was structured so that Freddie will take the first 30 basis points of losses on the transaction, followed by private investors, which bought debt notes on the following 300 basis points of potential losses.

Justice Department lawyers want to extract the largest possible penalty from Bank of America after a Charlotte, NC, jury found in October that its Countrywide Financial Corp. division committed fraud when it sold toxic mortgages to Fannie Mae and Freddie Mac in the years leading up to the 2008 financial crisis, according to court papers filed earlier this month.In its successful civil suit against BofA, the DOJ and the Securities and Exchange Commission estimated that the two GSEs lost some $850 million from thousands of loans acquired through CFC’s “Hustle” program between August 2007 and May 2008. BofA acquired Countrywide in 2008 and is liable for the fraud.