The notion of a common pass-through MBS issued by Fannie Mae and Freddie Mac was formally put in play this week, as the Federal Housing Finance Agency solicited comment on a proposed “single security” for the two government-sponsored enterprises. The Mortgage Bankers Association has been pushing the concept for several years, and it made it onto the FHFA’s formal agenda for the GSEs in 2014. Proponents say it would improve liquidity in the market and level out Freddie’s pricing disadvantage. Under the FHFA proposal, the new common MBS would adopt...

The Federal Housing Finance Agency should act now to slowly increase Fannie Mae’s and Freddie Mac’s guaranty fees, according to the Securities Industry and Financial Markets Association. SIFMA’s tempered support of a proposed government-sponsored enterprise g-fee increase runs contrary to the position held by much of the rest of the industry – that now is not the time. “We encourage...

Fannie Mae and Freddie Mac continued their conservatorship march toward smaller retained mortgage portfolios during the second quarter of 2014, with most of the focus on non-agency collateral, according to a new analysis by Inside MBS & ABS. The two government-sponsored enterprises ended June with a combined $872.7 billion in mortgage-related holdings, down 3.3 percent from the previous quarter. Compared to a year ago, their combined portfolio was down 19.7 percent. It was down 45.2 percent from the $1.592 trillion they held in the fourth quarter of 2008 shortly after the two were put in conservatorship. The biggest decline has been...[Includes one data chart]

The government-sponsored enterprises’ holdings of nonprime mortgages continue to decline, largely due to runoff, according to a new analysis by Inside Nonconforming Markets. Fannie Mae and Freddie Mac held a combined $252.22 billion in Alt A and subprime mortgage assets as of the end of the second quarter of 2014, down 18.3 percent from the second quarter of 2013. Purchased/guaranteed mortgages account for ... [Includes one data chart]

FHA Commissioner Carol Galante has announced plans to step down from her current post, leaving behind a Mutual Mortgage Insurance Fund that appears well on its way to recovery and a slumping FHA business. Industry response to Galante’s Aug. 12 announcement was mixed. Some stakeholders applauded her toughness and resolve in steering FHA through hard times, while others criticized her for policies that made it more difficult and costly for first-time homebuyers to obtain an FHA-insured mortgage loan. Galante’s nearly three-and-a-half year stint as FHA commissioner was highlighted by her efforts to stabilize the FHA’s ailing Mutual Mortgage Insurance Fund, reduce losses and improve lender oversight. She achieved these goals by creating a comprehensive risk-management structure at FHA, revamping FHA pricing and credit policies, and ...

The Department of Housing and Urban Development failed to bill lenders for 486 loans with enforceable indemnification agreements that created losses for the FHA, according to the HUD Inspector General. The loans were originated between 2004 and 2014 and were either in the Accelerated Claims Disposition program or the Claims Without Conveyance of Title program, or they went into default before an indemnification agreement expired. Due to procedural errors and apparent lack of oversight, HUD failed to recover $37.1 million for 486 loans that had enforceable indemnification agreements. The unbilled loans represented 8.0 percent of total activity in the programs during that period. In addition, HUD did not ensure that indemnification agreements were extended to 64 of 2,078 loans that were streamline financed. As a result, HUD incurred losses of ...

The False Claims Act (FCA) and the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) not only have become strong enforcement tools in the fight against FHA mortgage fraud but also an efficient means of recovering taxpayer losses. Having used both federal statutes effectively to wrangle huge settlements from large banks, federal prosecutors now have their eyes set on mid-level banks, according to compliance experts during a recent webinar hosted by Inside Mortgage Finance Publications. “Because these FCA [and FIRREA] lawsuits have been a cash cow for the Department of Justice and the Inspector General of the Department of Housing and Urban Development, I think these agencies will target mid-level banks next,” said ...

Weighed down by high premium costs and lender overlays, FHA lost more primary market share to private mortgage insurers and the Department of Veterans Affairs during the second quarter of 2014. Although June’s FHA endorsement numbers have not yet been released, the trend seen in April through May, along with Ginnie Mae securitization data, suggest that FHA business was up a modest 11.5 percent from the first quarter. But that increase provides no comfort to FHA, which saw its market share go down to 33.7 percent, a six-year low. From April to May, FHA forward endorsements rose by 2.4 percent to $10.61 billion. On a year-over-year basis, however, endorsements were down from $21.9 billion in May 2013, according to an Inside FHA Lending analysis of agency data. On the other hand, private MI companies reported a total of $44.19 billion of new insurance written (NIW) during the ... [2 charts]

Reverse mortgages would be included in Home Mortgage Disclosure Act reports under a proposed rule published recently by the Consumer Financial Protection Bureau. The proposed rule would expand the definition of a “covered loan” under HMDA to include reverse mortgages and home-equity lines of credit (HELOCs), which include reverse mortgages structured as open-end HELOCs. Currently, HMDA regulations do not require reporting of HELOCs, although lenders may do so if they choose. Currently, financial institutions only have to report information on a closed-end reverse mortgage if the transaction involves a home purchase, home improvement or refinancing. Among other things, the CFPB has proposed to require that all reverse mortgages and HELOCs be identified by loan type to distinguish them from other categories of ...

The Office of Inspector General for the CFPB, the Federal Deposit Insurance Corp., the National Credit Union Administration, and the Treasury Department are evaluating the coordination between the CFPB and other regulatory agencies in conducting supervisory activities, according to the CFPB OIG’s latest work plan. In June 2012, the CFPB and the prudential regulatory agencies issued a memorandum of understanding to clarify how the agencies will coordinate their supervisory activities. “The objective of the evaluation is to confirm that the required coordination is occurring and has been effective in avoiding conflicts or duplication of efforts,” the bureau’s OIG said. The evaluation is currently expected to be completed sometime during the third quarter of 2014. There are a handful of other ...