Look for Fannie Mae’s and Freddie Mac’s cadre of approved mortgage insurance companies to soon be required to adapt to new policies and eligibility standards in order to continue insuring loans purchased by the two government-sponsored enterprises, the head of the Federal Housing Finance Agency told lawmakers last week. Testifying before the Senate Banking, Housing and Urban Affairs Committee, FHFA Acting Director Edward DeMarco said that among the Finance Agency’s priorities for 2013 will be to update its MI master policies “by clarifying the role and responsibilities of insurance carriers,” particularly when servicers pursue loss mitigation to help delinquent borrowers. To better protect the interests of Fannie and Freddie, DeMarco said...

“We need the light hand of government to set standards and systems for the market to move forward and private capital to return,” said Chris Katopis, executive director of the Association of Mortgage Investors, in testifying at a hearing this week in the House Financial Services Committee. While members of the committee appear to be nowhere near agreement on how to resolve the ongoing conservatorships of Fannie Mae and Freddie Mac – or how they might be replaced – lawmakers, non-agency MBS issuers and investors all agreed on the need for new standards to increase non-agency MBS activity. The AMI called...

The Senate Banking, Housing and Urban Affairs Committee hasn’t marked up a bill in more than a year, but Democrats and Republicans on the panel pushed this week to begin the process of reforming the government-sponsored enterprises. “I think the time is right to address this issue and move it forward,” Sen. Jon Tester, D-MT, said this week at a hearing by the committee. “I think there are folks on both sides of the aisle that want to quit playing with this like a political football and ...

Department of Housing and Urban Development Secretary Shaun Donovan this week reiterated his agency’s request for additional legislative authority to regulate the Home Equity Conversion Mortgage program by mortgagee letter so that much-needed changes can be implemented immediately. Rather than go through the tedious legislative process of amending HECM legislation to improve the program and reduce HECM losses, expanding HUD’s authority would enable the department to undertake immediate reforms, such as restricting lump sum payments, requiring financial assessments of HECM applicants and requiring borrowers to ...

Private mortgage insurers may soon find themselves required to meet new eligibility standards if they want to continue doing business with the government-sponsored enterprises. In written testimony submitted to the Senate Committee on Banking, Housing and Urban Affairs, FHFA Acting Director Edward DeMarco said the FHFA intends to set new criteria for private MI companies in doing business with Fannie Mae and Freddie Mac. The revised private MI standards are among the agency’s priorities in 2013 and is part of the conservatorship strategic plan to ...

Democrats in Congress are putting pressure on federal regulators to increase oversight of servicers due to problems with independent foreclosure reviews and the $25.0 billion national servicing settlement. The regulators have pushed back to some extent while indicating that servicers will be subject to tighter oversight going forward. In 2011, consent orders from the Federal Reserve and the Office of the Comptroller of the Currency required independent foreclosure reviews to be completed by 14 servicers with the help of consultants. In January, most of the servicers agreed to stop the reviews and alternatively provide $8.5 billion in relief to borrowers. The regulators acknowledged...

The Department of Housing and Urban Development’s fiscal 2014 budget proposal is in for some rough sailing in Congress as House appropriators, unmoved by pleas to soften the impact of sequestration, criticized HUD’s lack of commitment to fiscal reform. Appearing as the sole witness before the House Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies, HUD Secretary Shaun Donovan had an earful from Republican lawmakers who expressed “deep concern” about the lack of comprehensive reform proposals in the proposed budget. Subcommittee Chairman Tom Latham, R-IA, expressed...

Fannie Mae’s and Freddie Mac’s recent, unambiguous return to profitability will diminish an already waning urgency among Capitol Hill lawmakers to proceed with legislative GSE reform as the companies’ profits flow into the U.S. Treasury by the billions, industry experts warn. Fannie announced last week that the GSE expects to remain profitable “for the foreseeable future” after posting record-shattering quarterly and yearly earnings for the period ending Dec. 31, 2012. In the wake of Fannie’s announcement, the White House this week said that from January 2013 to the end of 2023 the two GSEs could send $183.3 billion to the Treasury.

The Federal Housing Finance Agency’s lawsuit against UBS Americas and, by extension, more than a dozen other big banks, in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac will continue after a federal appeals court flatly denied UBS’ bid to dismiss the case. The Second Circuit Court of Appeals upheld a lower court ruling that denied UBS’ motion to dismiss the FHFA’s suit as time barred. In the summer of 2011, the FHFA filed 18 lawsuits in Manhattan federal court against UBS and other big banks on behalf of the GSEs, alleging violations of the federal Securities Act of 1933 for approximately $200 billion in MBS sold to Fannie and Freddie in the years prior to the mortgage market meltdown. The UBS appeal argument largely revolves...

Industry groups are urging Congress and the FHA to consider incorporating risk-sharing into the agency’s business model while appearing leery of other proposals, such as risk-based pricing and reduced FHA coverage. Testifying at a hearing before the House Financial Services Subcommittee on Housing and Insurance, the Mortgage Bankers Association and the National Association of Realtors said that while they do not support risk-sharing between FHA and private mortgage insurers, it is an option that is worth exploring in the context of FHA reform. There was...