A recent recommendation by the House Financial Services Committee to the FHA to consider charging “additional user fees” to strengthen and protect the Mutual Mortgage Insurance Fund has raised questions in the industry as to what lawmakers meant by user fees. The FHA, apparently, has no authority to do so. In its recently published views and estimates related to the FY 2014 budget, the committee noted that while the FHA has increased its mortgage insurance premiums, lawmakers remain concerned that the agency “has failed to make full use of its existing authorities to protect the health of the fund.” The committee urged...

With the Federal Reserve’s MBS portfolio quietly passing the $1 trillion mark in mid-February for the first time since late 2010, Fed Chairman Ben Bernanke this week continued to toe the party line on the historic level of support the central bank has provided to the MBS and Treasury markets. But there is more skepticism from Republicans on Capitol Hill and some Fed board members, and industry analysts are trying to dope out when the Fed buying spree will wind down. “After quadrupling its balance sheet engaging in unprecedented MBS asset purchases and creating an extended negative real interest rate environment, there is...

Adherents of a global tax proposal that would help countries raise revenue and make the financial sector pay for its fair share of crisis costs are calling on the U.S. for support. But first, the U.S. must overcome its fear of the “financial transaction tax,” or FTT, before this controversial tax option can be adopted globally, according to panelists in a forum hosted this week by the Center for American Progress. The CAP believes the tax is a “smart policy tool” that is both a revenue raiser and a stabilizer of volatile financial markets. The FTT is...

The Department of Justice and the Securities and Exchange Commission are likely to pursue more mortgage-related lawsuits due to pressure from Congress, according to former federal attorneys. “The fact that the attorney general now speaks of financial fraud enforcement as one of the top three priorities of the Department of Justice, just after terrorism and keeping people safe in their communities, trickles down to the lowest levels of the department and elsewhere in terms of the dedication of resources, the coordination, the training, the case referrals,” said Andrew Schilling, a partner at the law firm of BuckleySandler and a former chief of the civil division of the U.S. Attorney’s Office for the Southern District of New York. The latest pressure came...

Moody’s Investors Service and Fitch Ratings have downgraded the senior unsecured and issuer default ratings of The McGraw-Hill Companies, parent of Standard & Poor’s, to below A-level ratings with a negative outlook. The downgrades are largely due to the Department of Justice’s recent lawsuit regarding ratings of collateralized-debt obligations and rating models for non-agency MBS. “The Baa2 rating balances the company’s history of prevailing in its legal defenses against the potentially substantial negative credit effects that could result from adverse litigation or settlement outcomes,” Moody’s said after downgrading McGraw-Hill’s senior unsecured rating from A3 late last week. “In addition, the management focus and direct costs involved in defending litigation may be a persistent drag on the company’s operations over the intermediate term.” Moody’s said...

House Republicans may be able to pass tough FHA reform and solvency legislation out of committee but they may not have enough votes on the House floor or in the Senate to sustain such a bill, according to industry sources. Even after two successive hearings in the House Financial Services Committee this month, there has been no clear indication from Chairman Jeb Hensarling, R-TX, as to which proposals might go into a legislative package of FHA reforms. Hensarling is said to be operating “with a very strong hand,” and if it were up to him entirely, he would draft legislation that would contain some ...

Wells Fargo suffered a big legal setback after a federal judge denied its request to enforce a consent judgment under last year’s landmark $25 billion servicing settlement to prevent a New York lawsuit from proceeding. Judge Rosemary Collyer of the U.S. District Court for the District of Columbia rejected Wells Fargo’s argument that the new government suit filed in Manhattan district court was improper because it violated the consent judgment against Wells Fargo and flies in the face of the judgment’s “liability release” provision. Wells Fargo argued that the allegations in a civil mortgage fraud suit filed by ...

The Senate Banking, Housing and Urban Affairs will continue focusing on FHA solvency as part of its legislative agenda for the 113th Congress and has called a hearing next week to try to reach some bipartisan agreement on FHA reform. In a memorandum, Committee Chairman Tim Johnson, D-SD, said ensuring the health of the FHA Mutual Mortgage Insurance Fund is one of committee’s top priorities in sustaining and strengthening the nation’s economic recovery. Johnson said the committee will continue to conduct oversight on the condition of the FHA insurance fund and the role the FHA plays in the housing market as part of ...

Look for the Senate Banking, Housing and Urban Affairs Committee under a Democrat majority to focus over the next two years on assuring a smooth implementation of the Dodd-Frank Act, stabilizing the housing market and building a “bipartisan consensus” on housing finance reform, according to the committee’s chairman. “From protecting consumers and taxpayers from Wall Street abuses, to providing the Federal Housing Administration with additional tools to manage its finances while continuing to serve American families, I believe we can find common ground,” said Sen. Tim Johnson, D-SD, chairman. The committee will continue...

Look for lawmakers during the 113th Congress to bring considerable attention and legislative effort to bear regarding the future of housing and mortgage finance, but reform and resolution of Fannie Mae and Freddie Mac are far from the top of the priority lists of the two major committees with purview over the GSEs. This week, the House Financial Services Committee in the Republican-held House and the Senate Banking, Housing and Urban Affairs Committee of the Democrat-majority Senate issued their respective agendas for the 2013-2014 session. Sen. Tim Johnson, D-SD, said the Banking Committee will “continue to seek bipartisan consensus” on a new structure for housing finance.