The Federal Housing Finance Agency’s legal action late last week against many of the nation’s largest financial institutions on the grounds they misled Fannie Mae and Freddie Mac about the quality of subprime and Alt A MBS purchased by the government-sponsored enterprises has few positives but plenty of negative potential consequences for the market, experts say. The 17 separate lawsuits filed by the FHFA seek unspecified damages on $196 billion in mortgage securities the two GSEs purchased, mostly between 2005 and 2008. The agency conducted extensive loan-level reviews that allegedly revealed widespread discrepancies between... [Includes two pages of data]

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...

Even as the MBS market warily watches reports that the White House is considering mortgage refinancing as part of a broad effort to stimulate the housing industry and the economy at large, analysts offered mixed assessments of the effectiveness of the most likely option. Industry observers say the most likely scenario would involve a change in the pricing policies of Fannie Mae and Freddie Mac, a move that would not require...

The Federal Housing Finance Agency this week became among the latest, most influential parties to legally weigh in on the proposed $8.5 billion Bank of America settlement over non-agency mortgage-backed securities.On Aug. 30, the deadline to file objections to the deal, the Finance Agency filed a “Notice of Appearance and Conditional Objection” with the U.S. District Court in Manhattan on behalf of Fannie Mae and Freddie Mac.

The Federal Housing Finance Agency said last week to expect further litigation in its ongoing efforts to recover losses suffered by Fannie Mae and Freddie Mac in connection to the two GSEs’ investments in non-agency securities.Last week, the Finance Agency filed suit against UBS Americas Inc. and various related entities alleging misstatements and omissions of non-agency MBS purchased by Fannie and Freddie.

Credit rating agencies and government regulators are making wholesale changes to the way they come up with and use credit ratings in order to prevent a repeat of the financial meltdown, witnesses at a hearing of the House Committee on Financial Services said. “While much has changed with regard to credit ratings and credit rating agencies over the course of the past several years, our fundamental mission remains the same: to provide the market with independent benchmarks about the creditworthiness of ...

Regardless of whether the White House and Congress come to a debt ceiling deal before the fast approaching Aug. 2 deadline, agency MBS are in for a rough ride, experts say. Last week, Moody’s Investors Service and Standard & Poor’s lit a fire under the debt talks and sparked widespread consternation throughout the MBS arena when they announced that each may cut the U.S. credit rating two double-A within three months if there isn’t a “credible” agreement to address the U.S. debt burden. Consequently, Moody’s placed on review for possible downgrade ...

A coalition of six Federal Home Loan Banks has gone to court seeking formal standing as investors in the proposed $8.5 billion Bank of America settlement over mortgage-backed securities even as court papers reveal investors could be owed a sum three times greater than the current BofA proposal.The Federal Home Loan Banks of Boston, Chicago, Indianapolis, Pittsburgh, San Francisco and Seattle together own certificates in 73 of the trusts that are part of the proposed settlement for which they paid more than $8.8 billion.

California continues to be the top source of new single-family mortgages for Fannie Mae and Freddie Mac even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an upcoming special report, GSE Market Profile: First Half 2011 by Inside Mortgage Finance Publications.

Most of the top mortgage originators of agency-eligible home loans posted significant declines in MBS issuance during the second quarter, but a handful of firms bucked the current, according to a new ranking and analysis based on the Inside Mortgage Finance MBS Database. Overall agency MBS production declined 33.8 percent from the first quarter to the second, hitting its lowest three-month volume since the end of 2008. Through the midway point in 2011, single-family mortgage securitization by Fannie Mae, Freddie Mac and Ginnie Mae was off ... [includes two data charts]