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 ...

HUD Delays Implementation of Short-Sale Participation Requirement. The implementation of the PFS Participation Requirement, which is found in Mortgagee Letter 2013-23, Updated Pre-Foreclosure Sale and Deed-in-Lieu-of-Foreclosure Requirements, has been delayed indefinitely. All other provisions included in the mortgagee letter remain in effect. Previous guidance on short-sale participation requirements also remain in effect until further notice. FHA to Consolidate Lender ID Numbers. The FHA will consolidate the lender identification numbers of those participating in both the FHA Title I and Title II programs, provided ...

The Federal Home Loan Bank of Chicago has announced a partnership with Ginnie Mae to issue securities guaranteed by the secondary market agency and backed by home loans originated by member financial institutions. The new conduit product, “MPF Government Mortgage-Backed Securities,” provides another secondary mortgage market outlet for lenders originating mortgages insured by the FHA or guaranteed by the VA or the Rural Housing Service. Low-volume lenders that currently lack direct access to the secondary market are expected to benefit from the new FHLBank program. MPF GMBS would allow lenders to ... [1 chart]

Fannie Mae is starting to market a risk-sharing mortgage-backed security that would require investors to bear some of the financial risk if mortgages default. The company, which is reportedly getting ready to launch a “road show” to debut its new risk-sharing mortgage bond within the next two weeks, is following up on Freddie Mac’s $500 million Structured Agency Credit Risk bond, which the GSE priced in July. The Federal Housing Finance Agency’s Strategic Plan calls for both Freddie and Fannie to establish loss-sharing arrangements, in which private investors bear some or all of the credit risk.

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the second quarter of 2013, with a negligible increase from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted a modest but noticeable decline within the FHLBank system during the period ending June 30, 2013. GSE MBS accounted for 73.9 percent of combined FHLBank MBS portfolios, up 1.9 percent from the first quarter. The Finance Agency’s data do not separately break out Fannie and Freddie volume or share.

FHA lenders have gradually stretched to originate loans for borrowers with more modest credit scores in recent quarters, although these borrowers typically are better positioned to keep up with their payments, according to an Inside FHA Lending analysis of data released by the agency. The average credit score for single-family loans endorsed in the second quarter of 2013 was 693 – the lowest such average in nearly four years. This is partly the result of a shift toward more purchase-money mortgages, which generally have ... [1 chart]

Parties to trustee lawsuits challenging a city’s use of eminent domain to deal with foreclosures are gearing up for a face-off at an injunction hearing Sept. 13 in federal district court in San Francisco. The city of Richmond, CA, the defendant in the lawsuit, has suffered setbacks in the last few days and has yet to make good on its threat to initiate eminent domain proceedings after investor trustees rejected its offer to purchase distressed mortgages for restructuring. Wells Fargo and Deutsche Bank, acting as trustees for a group of ...