Most industry observers expect it will be too tall of an order for Congress to finish the difficult task of enacting GSE reform in 2014 amid the high-stakes mid-term elections and with political control of the Senate up for grabs. However, some experts note that lawmakers, both Democrat and Republican, may become more open to compromise and horse trading closer to the end of the year if it means getting legislation to the President’s desk rather than risk starting over next year with a potentially GOP-controlled 114th Congress.

Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, finally delivered this week their long-awaited mortgage reform bill that provides for a wind down of Fannie Mae and Freddie Mac and create in their place a new mortgage insurance entity to act as a new federal backstop. The 442-page draft by the Chairman and Ranking Member of the Senate Banking, Housing and Urban Affairs Committee sets a five-year timeline to shut down the two GSEs, while creating the Federal Mortgage Insurance Corp., a utility that securitizes and guarantees mortgages.

The agreement among Republicans, Democrats and the White House for the need to act and the heightened urgency to pass legislation before a potential shift in power after the mid-term elections could determine the outlook for housing reform legislation in 2014, according to analysts. Fannie Mae and Freddie Mac reform efforts in Congress and investor lawsuits are helping shape the housing debate this year, and the recently issued Johnson-Crapo draft legislation is the bill to watch going forward, said Bloomberg Industries analysts this week. The profitability of the two government-sponsored enterprises in 2013 not only fueled...

Fannie Mae and Freddie Mac continue to develop their new common securitization platform in relative secrecy, although the concept has become a key component of mortgage-finance reform recently unveiled by the leadership of the Senate Banking, Housing and Urban Affairs Committee. Under the bill drafted by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, the CSP would operate as a privately-owned utility through which single-family MBS would be issued, with or without the new explicit government guaranty. Regulated by the new overseer of the MBS market, the Federal Mortgage Insurance Corp., the platform would shepherd...

The top Democrat and Republican of the Senate Banking, Housing and Urban Affairs Committee this week delivered their long-awaited mortgage reform bill which aims to put Fannie Mae and Freddie Mac out of business within a half-decade window, but with a couple potential leases on the lives of the two government-sponsored enterprises. In a rare Sunday filing, the legislation authored by Senate Banking Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, would set up a powerful new agency, the Federal Mortgage Insurance Corp., which could assume control of the GSEs within six months of enactment and begin writing new “catastrophic” mortgage-securities guaranties. Based on the bipartisan legislation introduced by Sens. Bob Corker, R-TN, and Mark Warner, D-VA last summer, the new bill adds...

The economic feasibility and perhaps the successful winding down of Fannie Mae and Freddie Mac may come down to how the government accounts for the federal budget impact of shuttering the two government-sponsored enterprises, noted experts this week at a Bipartisan Policy Center forum. In light of Fannie’s and Freddie’s federal conservatorship status and the resulting control by the Treasury Department, the two GSEs are “effectively part of the government” and their operations should be reflected in the federal budget, according to the Congressional Budget Office. The CBO has concluded...

If Fannie Mae and Freddie Mac are eventually liquidated, the federal government could reap between $170 billion and $234 billion in net proceeds, according to a new audit of the firms, but that doesn’t mean the junior preferred stockholders in the two will see a dime of that money. The newly released Johnson-Crapo mortgage finance reform bill provides no relief to investors in the junior preferred or owners of common stock in the two government-sponsored enterprises, leaving all liquidation proceeds to the U.S. Treasury, which owns the senior preferred shares. Over the past 18 months, several high-profile private-equity firms – Fairholme Capital, Pershing Square and Perry Capital, to name a few – have invested...

It’s been a busy quarter for sales of mortgage servicing rights, but most of them have involved portfolios of $2 billion or less, spurring talk in the industry that regulatory oversight of MSR transfers is affecting the mergers and acquisition market. In particular, dealmakers are starting to call it the “Lawsky Effect,” named after Benjamin Lawsky, the superintendent of the New York Department of Financial Services who in early February put a “hold” on Wells Fargo’s sale of $39 billion in MSRs to Ocwen Financial. Lawsky has stated his concerns about Ocwen’s fast growth, its capacity to take on massive new assignments and complaints about some of its servicing practices. “I have not heard...

FHA lenders reported $8.7 billion in new originations in January, down from $10.9 billion in December and $23.7 billion from a year ago. Most were fixed-rate mortgages and 77.1 percent were purchase transactions.

The mortgage market has gradually shifted upstream since the collapse of the housing market and the painstakingly slow recovery, with big-ticket mortgages capturing a growing share of new originations, according to a new Inside Mortgage Finance analysis. Mortgages exceeding the traditional conventional loan limit of $417,000 accounted for 19.8 percent of new originations in 2013, up from 16.2 percent during the previous year. And with overall mortgage-production volume slumping over the second half of 2013, the jumbo share of new originations rose to 23.3 percent in the fourth quarter. The secondary-market agencies accounted...[Includes three data charts]