Mortgage banking income fell sharply in the third quarter and the compliance outlook remained murky, but banks reported a huge improvement in loan buybacks, according to a new Inside Mortgage Trends analysis of call-report data. Banks and thrifts repurchased or provided other indemnification totaling $1.998 billion during the third quarter, the lowest quarterly amount for the industry in five years. Banks first began reporting repurchase data in their call reports ... [Includes one data chart]

Fannie Mae and Freddie Mac issued $58.7 billion in single-family mortgage-backed securities during the month of November, a 13.4 percent decline from October but a 4.8 percent drop for the first 11 months of 2013, according to a new Inside The GSEs analysis.

Freddie Rescinds Fraud Training Requirement. Freddie Mac has withdrawn a requirement announced in September mandating fraud training in Bulletin 2013-13, issued Nov. 15. Freddie had required that seller/servicers provide third-party vendors retained to perform functions relating to origination and servicing of mortgages with training on fraud prevention, detection and reporting. The GSE decided to revisit the issue. In addition, the bulletin updates payment history verification requirements for manually underwritten mortgages, and announces that eligibility requirements applicable to higher-priced mortgage loans, previously announced in August, are applicable to higher-priced covered transactions (as defined in the Consumer Financial Protection Bureau’s ability-to-repay/qualified mortgage rule) and not solely to HPMLs.

Reform-minded lawmakers should move with all deliberate speed to restructure, recapitalize and remove Fannie Mae and Freddie Mac from the government’s hands or risk the taxpayers’ stake in the mortgage market, experts told members of the Senate Banking, Housing and Urban Affairs Committee. The committee’s hearing prior to the Thanksgiving break focused on when and how to terminate the charters of the two government-sponsored enterprises, as well as whether current revenue held by Fannie and Freddie should be used to offset the cost of the new system.

The Federal Home Loan Bank of Seattle announced that its regulator, the Federal Housing Finance Agency, has amended the Bank’s consent order in keeping with its improved financial performance. In October 2010, the FHFA directed the Seattle Bank to implement steps to stabilize its business, improve its capital classification and return to normal operations.

A group of four senators has asked the Obama administration and regulators to reject plans by municipalities to use eminent domain to acquire underwater performing mortgages, warning of a dire impact upon the entire mortgage lending space if such a proposal takes root. In a letter dispatched last week to Treasury Secretary Jack Lew and Housing and Urban Development Secretary Shaun Donovan, the bipartisan quartet of senators expressed their dismay that the administration “has been largely silent” on Richmond, CA’s proposal to seize performing mortgages, then refinance them into an FHA product.

Fannie Mae and Freddie Mac have finished the underwriting reviews of mortgages they acquired prior to their takeover by the federal government in 2008 and have now recovered more than $18 billion in restitution for breaches of selling representations and warranties, according to a new “progress” report from the Federal Housing Finance Agency. The GSE regulator notes that Fannie and Freddie have each executed multiple risk-sharing transactions, beating their mandated goal of $30 billion. The two also have achieved the Conservator Scorecard Objective of gradually reducing the less-liquid portions of their retained portfolios, according to the Finance Agency’s report.

Freddie Mac this week racked up another settlement in the GSE’s recent ongoing series of mortgage buyback deals when Bank of America announced it will pay $404 million to settle repurchase obligations tied to loans sold between 2000 and 2009. The payment also compensates Freddie for “certain past losses and potential future losses relating to denials, rescissions and cancellations of mortgage insurance,” the GSE said. The amount is less $13 million of repurchases already made.

A Manhattan federal court this week approved a proposed settlement between Residential Capital and the Federal Housing Finance Agency that both clears the way for the former conduit to exit bankruptcy and brings the FHFA one step closer to completing its massive legal action against some of the nation’s top financial institutions.Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York approved the agreement, which is tied to a settlement the FHFA reached with Ally Financial, ResCap’s former parent, in late October.

Legislation that would allow privately-insured credit unions access to the Federal Home Loan Bank system has been introduced in the House.Introduced last week by Rep. Steve Stivers, R-OH, and Rep. Joyce Beatty, D-OH, H.R. 3584, the Capital Access for Small Community Financial Institutions Act of 2013, would amend the Federal Home Loan Bank Act to allow privately insured credit unions to be eligible for FHLBank membership.