The supply of outstanding single-family MBS in the market fell 0.6 percent during the third quarter of 2011, according to a new analysis by Inside MBS & ABS. There was a total of $6.544 trillion of single-family MBS outstanding at the end of September, the lowest level since the third quarter of 2007. Although MBS supplies have been declining steadily over the past four years, securitized loans actually represent a historically high 63.3 percent of total home loan debt outstanding as of the end of the third quarter. The steepest decline is in non-agency MBS, a...(Includes one data chart)

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...

Federal regulators have offered few clues on what is next for proposed qualified residential mortgage regulations, and the uncertainty in the marketplace has been cited as an impediment to the resumption of non-agency securitization. “The agencies are carefully evaluating all of the comments received and are now actively engaged in considering the many issues raised as we determine how best to proceed with the risk-retention rulemaking,” Acting Comptroller of the Currency John Walsh said last week. The extended comment period on the proposed rule closed in August ...

Ginnie Mae may have reported potentially inaccurate data to Congress about its exposures because estimates were not based on the best available data, according to a recent report by the Government Accountability Office. The agency’s sensitivity analysis also ignored important data, which could affect the accuracy of its cash-flow forecasts, the report said. Although Ginnie Mae has revised its cash-flow forecast model, it has not implemented practices identified in Federal Accounting Standards Advisory Board guidance and risk-budgeting guidance, the report noted. By ignoring such practices, Ginnie Mae’s model may not be ...

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 ...

Total FHA endorsements declined 4.2 percent in October from the previous month and 29.7 percent from a year ago even as FHA refinances continued to slow, according to an Inside FHA Lending analysis of FHA data. A total of 88,060 mortgages were endorsed for FHA insurance in October, down from 91,963 loans in September. Of the October endorsements, 60,596 were purchase loans, down 9.0 percent from the previous month and 7.9 percent from the same reporting period last year. FHA refinancing increased 15.4 percent on a month-to-month basis but declined a whopping 57.9 percent from last year. Streamlined FHA refis were ... (Comes with one chart)

The Federal Housing Finance Agency filed a lawsuit in the U.S. District Court for the Northern District of Illinois against the City of Chicago this week to keep it from enforcing its recently amended “Vacant Buildings Ordinance” against Fannie Mae and Freddie Mac. The move may provide servicers a way to fight the ordinance without bringing upon themselves any enforcement action from the city while the litigation is pending, according to some observers. “The City of Chicago is interfering unlawfully with FHFA’s federally mandated oversight and exercise of discretion, as conservator...

Industry experts and trade groups said this week they were generally supportive of a House Republican bill to create a new non-agency residential MBS market, but they still want the government to have a role, however limited, in the final product. The Private Mortgage Market Investment Act, drafted but not yet filed by Rep. Scott Garrett, R-NJ, would create a heavily regulated MBS market made up solely of private entities that would function with no federal guarantee at all. Garrett, who chairs the House Financial Services Subcommittee on Capital Markets and Government...

Foreign investors are the leading purchasers of Ginnie Mae MBS and may reinvest next year only in Ginnies for “safety” and to prepare for new tougher rules on capital and liquidity under the Basel III accord, according to analysts. Foreign investors currently hold $620 billion of the $3.45 trillion in U.S. MBS, and half of that is Ginnie Mae MBS. JPMorgan Securities analysts expect the Ginnie share of foreign MBS holdings to increase in 2012. They also expect U.S. banks to increase their Ginnie Mae purchases. Purchases by overseas investors, with an extra...(Includes one data chart)

Ginnie Mae may not be accurately disclosing its financial exposures to Congress because it is not fully implementing federal accounting guidance and using critical information, according to a recent report by the Government Accountability Office. GAO auditors found that Ginnie Mae did not stick to federal accounting guidance in developing the inputs and procedures for reporting forecast costs and revenues. Under the Financial Accounting Standards Advisory Board guidance for preparing cost estimates of federal credit programs, reporting entities are required to develop estimates...