Fannie Mae and Freddie Mac this week advised lenders that they will increase the guarantee fees they charge on all mortgage products by 10 basis points starting April 1, the result of a money-raising scheme enacted by Congress in the waning hours of the 2011 legislative session. A 10 bps point hike in fees charged by the government-sponsored enterprises may have a nominal effect at first, but the long-term implications are more significant. Politically, the increased fees will not be used to cover losses incurred by Fannie and Freddie – or even to repay the government’s costs incurred to...

Congress has approved legislation mandating an FHA premium increase of 10 basis points, corresponding to an increase in fees charged by Fannie Mae and Freddie Mac for placing guarantees on cash flows to mortgage-backed securities investors. The increases were in the Temporary Payroll Tax Cut Continuation Act of 2011, which was approved by the House on Dec. 23 by unanimous consent and previously cleared by the Senate. In addition to raising guarantee fees charged by the two government-sponsored enterprises, the new law requires the Department of Housing and Urban Development to raise FHA annual...

President Obama this week moved to break a GOP blockade in the Senate by making a recess appointment of Richard Cordray to become director of the Consumer Financial Protection Bureau, a political maneuver that defies 20 years of precedent and may set the stage for a legal challenge. The Obama administration claimed that it is fully within its Constitutional authority to place the new director into his position, dismissing as a gimmick the pro-forma sessions Republicans used to block the nomination. A number of consumer groups came out in support of the appointment. The president’s allies in Congress were...

Risk-sharing programs that have already been tested and proven effective could be dusted off and made the focal point of efforts to steer the mortgage finance system to a more sustainable, less volatile foundation, investors say. There is widespread agreement that private capital needs to play a much greater role in the mortgage finance system that has been dominated by Fannie Mae, Freddie Mac and the government mortgage-insurance programs since the financial crisis of 2008. There is no consensus on how to do that, and little likelihood that Congress will agree to a solution any time...

Industry trade groups, as well as Fannie Mae and Freddie Mac’s regulator, are questioning the wisdom of Congress as lawmakers in both chambers have bills pending to hike the fees charged to guarantee GSE mortgages as a way to help offset the cost of extending the payroll tax cut through 2012.Both House and Senate versions of tax cut extension bills would add an additional 10 basis points to the guarantee fees charged by Fannie and Freddie through 2021. The increase would offset about $35.7 billion in costs, including $1.3 billion in the first year, according to the Congressional Budget Office.As Inside the GSEs went to press, the prospect of any tax cut extension was in doubt after the House rejected the bill calling for a two-month extension. Instead, House Republicans demanded immediate talks with the Senate on a year-long plan but the Senate ruled out further negotiations until the House passes the stop-gap measure.

The Federal Housing Finance Agency last week filed suit against the city of Chicago claiming that its attempt to enforce a recently amended vacant buildings ordinance on properties owned by Fannie Mae and Freddie Mac “impermissibly encroaches” on the FHFA’s role as sole regulator of the GSEs.Filed in the U.S. District Court for the Northern District of Illinois, the FHFA’s lawsuit on behalf of the two GSEs seeks to prevent the city from enforcing the ordinance which requires mortgagees to pay a $500 registration fee for vacant properties and requires monthly inspections of mortgage properties to determine if they are vacant. "The ordinance would impose on the enterprises the responsibilities, but not the benefits of ownership of vacant property on which they hold the mortgage,” said the FHFA in a statement. “The ordinance would create risks and liabilities for the enterprises at a time when they are already supported by taxpayers, including those in the city of Chicago.”

There’s been a notable changing of the guard among attorneys in the mortgage banking practices at the law firms of Patton Boggs, Ballard Spahr and Dykema. Partners Richard Andreano, John Socknat and Michael Waldron and associate Reid Herlihy left Patton Boggs recently with upwards of 100 clients and signed on with the newly created Mortgage Banking Group at Ballard Spahr. The new unit is part of Ballard Spahr’s larger effort to build up its Washington, DC, office. Meanwhile, Dykema augmented its regulatory presence by bringing on board former Patton Boggs senior lawyers Heather Hutchings and Haydn Richards to its Financial Services Regulatory and Compliance practice.

Republican lawmakers in the House advanced an ambitious bill to create a regulatory framework for non-agency mortgage securitization over its first legislative hurdle this week, although they failed to gain much Democratic support and the future for mortgage reform legislation in the Senate remains highly uncertain. The House Financial Services Subcommittee on Capital Markets and the Government Sponsored Enterprises approved draft legislation, the Private Mortgage Market Investment Act, introduced by its chairman, Rep. Scott Garrett, R-NJ. The amended legislation, which...

Market experts and participants are uncertain as to just how capable the private sector is to step in and replace Fannie Mae and Freddie Mac, as legislative initiatives to deal with the government-sponsored enterprises and reform the non-agency MBS market gain some momentum in Congress. “I think the problem so far has been the fear that the flow of credit would dry up if we try to extract the government from the mortgage finance system. With $5 trillion in GSE/agency debt out there, it’s a compelling fear,” said Ralph Daloisio, a managing director of the New York-based structured finance group of...

Senate Republicans have threatened to block the confirmation of Carol Galante as head of the FHA until Senate Democrats come up with a plan to deal with Fannie Mae and Freddie Mac. The Senate Committee on Banking, Housing and Urban Affairs this week voted 13 to 9 to send Galante’s nomination to the Senate floor amid Republican calls to reject the nomination. Some Republicans expressed concern over the health of the FHA Mutual Mortgage Insurance Fund, citing a recent independent actuarial study that reported a precarious drop in the fund’s excess capital reserve for unexpected losses. Sen. Jim DeMint, R-SC, said he did not think ...