The ongoing uncertainty about the future of Fannie Mae and Freddie Mac is weighing on the mortgage industry and it’s only going to get worse with time, said the former head of the Federal Housing Finance Agency this week. Edward DeMarco, now a senior fellow in residence for the Milken Institute’s Center for Financial Markets, warned that with the government in effective control of the mortgage market, the risk grows of capital allocation and pricing decisions made through the prism of political calculation rather than due to sound, market driven principle.

The Federal Housing Finance Agency’s most recent settlement of non-agency mortgage-backed securities lawsuit has one consumer group seeing red as it claims taxpayers will ultimately get stuck with the cost of the bank’s multi-million dollar payout. Late last week, the FHFA announced a $550 million legal deal with HSBC North American Holdings, leaving just two civil cases tied to nonprime MBS issuance still unresolved.

There is little enthusiasm in the mortgage market for higher guaranty fees charged by Fannie Mae and Freddie Mac, various industry groups indicated in input letters to the GSEs’ regulator. In June, the Federal Housing Finance Agency issued a call for public comment on how the GSEs should calculate g-fees and whether the FHFA should proceed with a 10 basis point g-fee hike announced last year. In one of his first acts as FHFA director in January, Mel Watt postponed the g-fee hike pending further study.

A tremendous amount of uncertainty is causing mortgage lenders to be more restrictive with credit than they otherwise might be – mostly stemming from conflicts with investors, increased regulation and the ambiguity from major legal settlements. “Lenders are running scared,” said Paulina McGrath, president of Republic State Mortgage, during a conference sponsored by the Bipartisan Policy Center this week in Washington, DC. “It’s not just the regulation that’s causing a dramatic increase in ...

The Federal Housing Finance Agency’s proposed capital requirements for private mortgage insurers would raise costs for borrowers but there is a need for new standards, according to industry group comments. The Mortgage Bankers Association, National Association of Realtors and several private MI companies have urged the Federal Housing Finance Agency to ease proposed capital requirements for private MIs.

Loans originated by mortgage brokers tended to have slightly lower credit scores and slightly higher debt-to-income ratios than production by retail lenders and correspondents. An Inside Mortgage Trends analysis of mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae during the second quarter found that broker originations had an average credit score of 721.9 – compared to 728.5 for retail production and 723.4 for correspondent originations. The average DTI for ... [Includes one data chart]

The Senate’s housing finance reform bill would save the government some $60 billion over 10 years according to an analysis by the Congressional Budget Office, but don’t hold your breath waiting for the windfall, say critics. Earlier this month, the CBO issued its estimate, which concluded that replacing Fannie Mae and Freddie Mac with a new securitization program that couples a first-loss position for private capital with back-end government insurance could reduce “direct spending” by $60 billion over the 2015-2024 period.

Experts Laud FHFA’s Plan for ‘Single Security,’ But Urge Quicker Arrival at Goal. The Federal Housing Finance Agency’s “single security” proposal for a generic Fannie Mae/Freddie Mac MBS is “well-thought out” and “worthy of serious consideration,” but the agency should pick up the pace in its implementation to avoid making the solution part of the problem, according to a paper from the Urban Institute. Lewis Ranieri, chairman of Ranieri Partners, and Laurie Goodman, director of the UI’s Housing Policy Center, expressed concern that the FHFA “may be contemplating a slower pace in the project than it warrants.”

Together, Fannie Mae and Freddie Mac in August posted a combined increase in the volume of single-family mortgages securitized, according to a new Inside The GSEs analysis. Fannie and Freddie issued $61.1 billion in single-family mortgage-backed securities in August, a 5.5 percent increase from July.However, August's MBS issuance was down 56.7 percent on a year-to-date basis.

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 2014, with a very slight decline 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 an increase within the FHLBank system during the three-month period ending June 30, 2014.