A reformed housing finance system should first and foremost put the risk and rewards of mortgage lending in the hands of “private actors,” with the government playing a key role to reduce the impact of the inevitable financial-market failures, “especially when their failures are exacerbated in a cyclical downturn,” an Obama administration official noted this week. Speaking at an Urban Institute event, James Stock, a member of the Council of Economic Advisers, outlined the administration’s central theme of “cyclical resilience” or the need for the mortgage finance system to provide liquidity at “reasonable rates” during both good and bad times. “A cyclically resilient housing finance system provides...

Foreclosure timelines and servicers’ emphasis on loss mitigation has dampened improvements to loss severities on non-agency MBS, according to Fitch Ratings. The rating service said this week that while national average home prices have increased by 14 percent in the past year, loss severities on liquidated properties in non-agency MBS have improved by only 5 percent. In the third quarter of 2013, it took an average of 32 months to liquidate a mortgage included in a non-agency MBS, according to Fitch, more than twice as long as average liquidation timelines in 2008. “Longer timelines translate...

Citigroup Global Markets Realty last week issued the first jumbo mortgage-backed security in more than a month and Redwood Trust is preparing a deal for next week. However, industry participants suggest that jumbo MBS issuance will remain limited through at least early 2014 due to a lack of demand from investors and strong portfolio appetite jumbos among from big banks. Citi’s $209.95 million jumbo MBS, its first in the new era of the non-agency market, wasn’t met with strong demand, according to ...

Ginnie Mae issuers reported a 14.0 percent drop in mortgage-backed securities issuances in the third quarter from the previous quarter as refinance activity declined further and home-purchase lending slowed during the period, according to an Inside FHA Lending analysis of Ginnie Mae data. Despite the quarter-over-quarter drop, Ginnie production rose 11.2 percent in the first nine months of 2013. Volume over this period totaled $313.8 million, of which 60.3 percent were FHA loans, 33.9 percent were VA, and 5.2 percent were rural housing loans. Ginnie MBS issuance dropped gradually ... [2 charts]

The Federal Housing Finance Agency spent the last two weeks racking up several legal settlements in its massive litigation action against some of the nation’s financial institutions. Look for more to come predict industry analysts. On Oct. 25, JPMorgan Chase agreed to pay $4.0 billon to settle claims on $33.8 billion of non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac.

Fannie Mae and Freddie Mac issued $67.7 billion in single-family mortgage-backed securities during the month of October, a 13.8 percent decline from September but a 4.6 percent rise for the first 10 months of 2013, according to a new Inside The GSEs analysis. October’s decline was less steep than September’s 20.0 percent month-to-month fall off in MBS.Top-ranked Wells Fargo’s Fannie and Freddie securitization at $11.6 billion fell both on monthly and year-to-date bases by 27.0 percent and 23.3 percent respectively. [Includes one data chart.]

Building on both GSEs’ recent risk-sharing transactions to achieve the Federal Housing Finance Agency’s $30 billion 2013 Conservatorship Scorecard target, the head of the FHFA said this week to expect more of the same as well as additional risk-sharing innovations. In a speech at the Bipartisan Policy Center, FHFA Acting Director Edward DeMarco said that Fannie Mae and Freddie Mac, in concert with the Finance Agency, are “planning for the scope and depth of risk-sharing transactions to continue and expand.”

The U.S. Court of Appeals for the First Circuit has affirmed a district court’s dismissal of a putative class action alleging that a lender improperly required FHA borrowers to buy and maintain higher flood insurance coverage than that indicated in their mortgage contracts. According to an analysis by the Washington law firm BuckleySandler, the ruling from an equally divided en banc court allows mortgage lenders to require borrowers to maintain flood insurance equal to the replacement value of their homes. In Kolbe v. BAC Home Loans Servicing, LP, No. 11-2030, 2013 WL 5394192 (1st Cir. Sept. 27, 2013), plaintiff Stanley Kolbe contends ...

The mix of single-family mortgages securitized by Fannie Mae and Freddie Mac during the third quarter of 2013 continued to shift toward purchase mortgages, according to a new Inside Mortgage Trends analysis of the government-sponsored enterprise market. Purchase mortgages accounted for 36.7 percent of Fannie/Freddie business during the third quarter, up from 23.9 percent during the previous period. It was the highest purchase-mortgage share of GSE business since the market collapse ... [Includes two data charts]

Fannie Mae and Freddie Mac may have to dial back the multifamily spigot if they’re going to meet the targets their regulator wants them to as it seeks to shrink the GSEs’ presence in the space. It looks like it might require a bigger turn of the dial for Freddie than for Fannie. As part of the Federal Housing Finance Agency’s 2013 Conservatorship Scorecard, FHFA Acting Director Edward DeMarco has called for a 10 percent reduction target in GSE multifamily business volume this year compared to 2012.