Reversing at least temporarily a long-running trend in the mortgage market, the four biggest banks in the U.S. expanded their presence in the GSE single-family market in the third quarter of 2016. Together, Wells Fargo, Chase, Bank of America and Citigroup delivered $61.88 billion of single-family loans into Fannie Mae and Freddie Mac mortgage-backed securities during the third quarter, according to a new Inside The GSEs analysis and ranking. That was up a hefty 45.0 percent from the second quarter, well above the 29.7 percent increase in overall MBS issuance by the two GSEs. The four megabanks, all with over $1 trillion in assets, expanded their combined GSE footprint by 2.2 percent from the second quarter.

The ruling handed down this week that concluded the structure of the Consumer Financial Protection Bureau is unconstitutional has led to industry chatter that the Federal Housing Finance Agency, which is similarly structured, could be more closely examined. In PHH Corp. v. Consumer Financial Protection Bureau, a DC Circuit Court judge found that the bureau’s single-director structure was unconstitutional and dismissed a $109 million penalty against PHH for violations of the Real Estate Settlement Procedures Act. Robert Maddox, financial services litigation attorney with Bradley Arant Boult Cummings LLP, told Inside The GSEs, “While the court did not address the constitutionality of FHFA, the framework of FHFA may possibly lend itself to the same constitutional scrutiny as the CFPB.”

The comment period on credit risk transfers ended Oct. 13 and letters from industry groups have been pouring in this week, with many primarily focusing on the issue of front-end versus back-end credit-risk transfers. While some advocate for more front-end risk- sharing deals, instead of the back-end ones that account for more than 80 percent of CRTs to date, others warned that “winners and losers” should not be picked. Back in June, the FHFA asked for industry feedback on various aspects of its CRT program. It also extended the deadline from August to October because industry stakeholders wanted more time to evaluate the questions raised in the request for input.

Documents revealed to plaintiffs’ attorneys in a prominent GSE shareholder case is causing some to question what President Obama was told about Fannie Mae’s and Freddie Mac’s profitability when the Treasury sweep took place in 2012. Judge Margaret Sweeney released her 80-page opinion last week and it gave more insight into her decision. While only a short summary sentence of each of the 56 documents is available now, it does show communication between high-level officials at the Treasury Department, Federal Housing Finance Agency and the White House regarding the Treasury’s sweep of Fannie and Freddie profits.Investors Unite, a GSE shareholder group, noted that the government might have been trying to keep the documents hidden because...

Fannie Mae and Freddie Mac securities remained the preferred investment choice of the 11 Federal Home Loan Banks during the first half of 2016, according to a new ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. GSE MBS accounted for $110.6 million of the total $138.4 million in business. There was a 2.0 percent quarterly increase from the first to the second quarter. GSE MBS accounted for 79.9 percent of combined MBS portfolios. The FHFA data does not separately break out Fannie and Freddie volume or share.

The Federal Housing Finance Agency issued guidance for the GSEs and Federal Home Loan Banks to establish independent internal audit (IA) functions. This is so they can relay timely information and make the appropriate corrections when it comes to elevated risks. The agency requires the boards of Fannie Mae, Freddie Mac and the FHLBanks to have an audit committee and a chief audit executive (CAE) solely responsible for the IA function. The FHFA said that the CAE must establish internal audits that are independent and objective so that they effectively identify and assess risks. Internal audits should cover the entire audit universe over a maximum four-year period.

The supervision of examiners in the Division of Federal Home Loan Bank Regulation has been lax when it comes to making sure deficiencies within the FHLBanks are corrected, according to a recent Federal Housing Finance Agency Office of the Inspector General report. The IG reviewed a sample of nine matters requiring attention (MRA) that the division issued from January 2014 through December 2015. When it comes to correcting serious supervisory matters, the IG said that the bank regulator has been inconsistent in following FHFA requirements. For two of the MRAs, examiners determined that the affected FHLBank made no progress in remediating the deficiencies and reissued MRAs with the same exact terms.

The Federal Housing Finance Agency has included more details regarding how it will monitor the examinations of Fannie Mae and Freddie Mac in its annual performance plan for fiscal year 2017, released last week. Over the past year, the FHFA’s Office of Inspector General has blasted the regulator for not completing targeted examinations on time and inadequate follow-up on what were deemed matters requiring attention (MRAs). The new plan noted that the GSEs will continue to address MRAs by submitting remediation plans to FHFA for review. Each non-objected remediation plan will include a timeframe for completion within the fiscal year the MRA was issued or beyond. FHFA added that Fannie and Freddie management are responsible for...

A judge ruled that the city of Chicago cannot impose a real estate transfer tax on buyers who purchased homes sold by the GSEs. Even though federal law does not allow local governments to collect taxes to property held by federal lenders, the GSE accused the city of circumventing the law by waiting for properties to be sold then sending the buyers a tax bill. This ruling stems from a federal court case last October in which Fannie Mae and the Federal Housing Finance Agency sued the city for trying to collect taxes from buyers who purchased foreclosed homes from the GSE.

The Federal Housing Finance Agency recently issued guidance on data management and usage and said it expects Fannie Mae and Freddie Mac to have the appropriate policies, procedures and standards in place.The advisory bulletin noted that the architecture of the data should provide easy access and effective utilization across the GSE as appropriate. Each GSE should also establish data quality requirements so that data used for decision-making are relevant, accurate, complete, timely and consistent. Five different areas concerning data were highlighted in the bulletin. Under data governance, the FHFA said that the GSEs should each establish a data...