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 ...

Private mortgage insurers would play a strategic role under a new Senate proposal for winding down Fannie Mae and Freddie Mac and privatizing guarantees on high-quality mortgage securitizations. Introduced by Sen. Johnny Isakson, R-GA, the Mortgage Finance Act of 2011 would create a new regulatory framework for securitizing “qualified residential mortgages” and an alternative form of guarantee provided by a new Mortgage Finance Agency. Under Isakson’s bill, the two government-sponsored enterprises would be placed in a run-off mode by the Federal Housing Finance Agency 18 months from the date of enactment. They would be required to ...

Ginnie Mae recently announced changes to rules implementing provisions under the Servicemembers’ Civil Relief Act for reimbursing excess mortgage interest to Ginnie Mae issuers. Under the revised SCRA reimbursement policy, issuers will be reimbursed excess interest payments on SCRA mortgage loans based on two different dates for reservists and active members of the military, said Ginnie Mae officials during an issuer outreach webinar on Dec. 8. If the borrower is a reservist, the reimbursement will be based on the date of the receipt of the deployment letter and reimbursements for active members will be based on the deployment date. Under the SCRA, mortgage lenders are required to ...

Republican lawmakers on both sides of Capitol Hill are pushing harder for secondary mortgage market reform legislation as the first session of the 112th Congress moves toward a holiday break. The House Financial Services Subcommittee on Capital Markets and the Government Sponsored Enterprises this week approved legislation aimed at boosting the non-agency mortgage securities market by creating an extensive federal regulatory framework. The bill, approved on a party line vote, does not address the fate of Fannie Mae and Freddie Mac, nor does it provide for any federal backing for...

In the world of federal budget magic, Democrats and Republicans are both looking at increases in Fannie Mae and Freddie Mac guarantee fees as a way to offset the cost of extending payroll tax breaks due to expire at the end of 2011. Both parties so far are rejecting the other party’s proposed solution to keep the tax break, though both bills include nearly identical plans to start raising fees charged by the government-sponsored enterprises. The Senate Democrats’ Middle Class Tax Cut Act of 2011 would start raising GSE guarantee fees by 12.5 basis points per year. The GOP bill in the...

A Senate panel this week endorsed President Obama’s nominees for open posts at the Department of Housing and Urban Development and the Federal Deposit Insurance Corp., although the nomination of Carol Galante as head of the FHA may likely be delayed on the Senate floor. While the vote on the nominations of Maurice Jones to become HUD deputy secretary and Thomas Hoenig to be vice chairman of the Federal Deposit Insurance Corp. were unanimous, Galante ran into trouble with Republicans on the Senate Committee on Banking, Housing and Urban Affairs. Galante’s nomination was approved on a...