Pending inter-agency proposals to implement risk-retention requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act could undermine the return of private capital to the housing finance market, warned industry participants. Testifying this week during a House subcommittee hearing, the Mortgage Bankers Association and other critics of risk retention said that a narrow definition of a “qualified residential mortgage” and overemphasis on higher downpayment may have an adverse impact on credit availability. MBA Chairman Michael Berman told members of the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity that while...

A proposed bipartisan House bill that would dissolve Fannie Mae and Freddie Mac but retain an explicit government guarantee for certain mortgage-backed securities appears poised to go nowhere fast, despite vocal trade group support. Earlier this month, H.R. 1859, the Housing Finance Reform Act of 2011, was filed amid a splash of headlines by Rep. John Campbell, R-CA, and co-sponsor Rep. Gary Peters, D-MI. The bill would empower the Federal Housing Finance Agency to issue charters establishing privately held and funded housing finance guarantee associations. The associations would be empowered to deal in conventional mortgages only for the purpose of...

Testifying before the House Financial Services Subcommittee on Capital Markets and GSEs this week, the head of the Federal Housing Finance Agency took issue with some of the proposed bills in the legislative package intended to wind down Fannie Mae and Freddie Mac. “I appreciate the effort in these and other bills to begin moving towards a final resolution of the enterprises in conservatorship, but I also recognize the critical and contemporaneous need to provide market participants with greater clarity and assurance about the ultimate role of the government in housing finance beyond the issues surrounding the enterprises,” said...

The Federal Housing Finance Agency has gone to court in order to deal itself into a wrongful termination suit filed last year by a former Fannie Mae executive against the GSE. According to papers filed in the U.S. District Court for the District of Columbia, the FHFA sought a temporary stay of the lawsuit, citing its authority as Fannie’s conservator under the Housing and Economic Recovery Act of 2008. “The conservator’s participation will aid the parties and the court in resolving the issues presented in this action, including the issue of Fannie Mae’s status vis-à-vis the federal government as it relates to the plaintiff’s claims,” said the Finance Agency in...

During testimony this week before the Senate Banking, Housing and Urban Affairs Committee, housing trade association representatives warned lawmakers that the current efforts to wind down Fannie Mae and Freddie Mac must not disrupt the already fragile housing and secondary mortgage markets. National Association of Home Builders First Vice Chairman Barry Rutenberg told Senators that Fannie and Freddie should neither be converted to government agencies nor should their functions be completely turned over to the private market. Instead. NAHB supports making major changes in the structure and operations of the secondary mortgage market not unlike...

Industry groups urged policymakers to use caution in considering legislation to reduce FHA loan limits, require higher downpayments and make further changes to mortgage insurance premiums. In testimony before the House Financial Services Subcommittee on Insurance, Housing and Economic Opportunity this week, officials of the mortgage banking and housing industries supported efforts to reform the FHA, Ginnie Mae and the Rural Housing Service to restore stability and strength to the housing sector. But such reforms should strike the proper balance between prudent risk management and providing credit assistance to qualified borrowers, they said. The hearing was called...

The head of the Federal Housing Finance Agency urged House Republican sponsors of various bills aimed at reforming Fannie Mae and Freddie Mac to include the government-sponsored enterprises’ regulator as part of the solution to avoid the problem of the two sides working at cross purposes. “FHFA and the enterprises are facing challenging times as Congress considers legislation to restrict, transform and wind down the enterprises,” said Edward DeMarco, acting director of the FHFA, during a hearing in the House Financial Services Subcommittee on Capital Markets, Insurance and GSEs this week. “During this period, I respectfully ask that...

California Attorney General Kamala Harris this week announced a new mortgage-fraud investigating force to monitor and prosecute deviations from the mortgage processes required by law. The new group, called the California Attorney General’s Mortgage Fraud Strike Force, will be composed of attorneys and investigators from the state Department of Justice (both civil and criminal), and will oversee processes such as mortgage loan origination and the way mortgage-backed securities are marketed to investors. “We will work to safeguard the homeowner at every step of the process – from origination of a loan to its securitization – and we will...

Florida. The state legislature recently passed SB 1613, which allows licensed loan originators to work as contract loan processors or in-house loan processors, but includes in-house loan processors in certain disciplinary provisions...