Speculators in Fannie Mae/Freddie Mac junior preferred shares will benefit if they can prove loan loss reserves at the two were over-stated.

Flagstar, which ranks eighth among all originators according to Inside Mortgage Finance, funded $6.4 billion of home mortgages in 4Q, a 17 percent decline from the prior period.

Fannie Mae and Freddie Mac securitized a total of $43.18 billion of single-family mortgages that carried private mortgage insurance during the fourth quarter of 2013, according to a new market analysis and ranking by Inside Mortgage Finance. That was down 25.8 percent from the $58.18 billion of private MI mortgages securitized by the two government-sponsored enterprises in the third quarter of last year. The silver lining was that overall GSE production declined even more, with new GSE mortgage-backed security issuance dropping 36.1 percent from the third to the fourth quarter. Overall, some 23.8 percent of GSE-securitized single-family mortgages had...[Includes two data charts]

When Fannie Mae and Freddie Mac unveil their fourth-quarter 2013 results in February, the two government-sponsored enterprises are expected to again report strong earnings driven by: higher guaranty fee income, one-time gains tied to legal settlements, and a boost from lower loan-loss reserves. But most of the money will be swept straight into the U.S. Treasury. One of the major factors in the GSEs’ huge 2013 earnings so far – the release of deferred tax assets – will likely be...

Michael Stegman, counselor to the Treasury Department on housing-finance policy, said this week that legislation to reform the government-sponsored enterprises is a top priority for the Obama administration. However, industry analysts suggest that Congress is unlikely to pass such legislation anytime soon, leaving the Federal Housing Finance Agency as the driver of GSE reform. “Indefinitely continuing a taxpayer-backed duopoly is neither sustainable nor sensible public policy,” Stegman said this week at the ABS Vegas conference sponsored by the Structured Finance Industry Group and Information Management Network. He pushed...

The hunger for GSE speculation is also causing some investors to buy Fannie/Freddie common which has been rising of late, but not by much. However, one GSE watcher believes that buying the common, "is a fool’s game."

In other words, the White House still wants to dismantle Fannie Mae and Freddie Mac and doesn't seem to care about all the money the two are returning to the government.

It's no secret that banks like to hold jumbo mortgages in portfolio, but depositories are also major contributors to non-agency securities.

The change resulted in the cessation of dividend payments by the GSEs to Treasury, replacing it with a “sweep” of all almost net profits earned by Fannie and Freddie.

Refinance mortgages accounted for 80.1 percent of agency production back in 2012, but that declined to 65.6 percent last year and just 45.3 percent of fourth-quarter business.