Guarantee fees on Fannie Mae and Freddie Mac single-family mortgage-backed securities have been edging higher over the past year and in April took a 10 basis point leap higher, but the timetable for future increases is unclear. In April, the government-sponsored enterprises implemented a 10 bp increase in guarantee fees that was mandated by Congress as a way to pay for an extension of a cut in payroll taxes. All of the added revenue from the fee hike, which will remain in effect for 10 years, will go to the U.S. Treasury and not cover Fannie and Freddie credit losses or count toward the GSEs’ obligations...

In a move intended to maintain the integrity of data that helps guide the decisions of MBS investors, the Financial Industry Regulatory Authority last week fined Citigroup Global Markets $3.5 million for allegedly providing “inaccurate mortgage performance information, supervisory failures and other violations” in connection with subprime residential MBS. “Citigroup posted data for its RMBS deals that it should have known was inaccurate; and even after they learned that the data was inaccurate, Citigroup did not correct the problem until years later,” said Brad Bennett, FINRA executive vice president and...

The government’s multi-billion dollar investment bailout of Fannie Mae and Freddie Mac allowed the two government-sponsored enterprises to avoid an insolvency that could have triggered the collapse of the U.S. housing finance system, concluded a new report by the official watchdog of the GSEs’ regulator. The Federal Housing Finance Agency’s Office of Inspector General’s report – “Fannie Mae and Freddie Mac – Where the Taxpayers’ Money Went” – noted that the U.S. Treasury had dropped some $185 billion into the two GSEs since early September 2008 through the end of last year. “The enterprises’ shareholders lost...

The Securities and Exchange Commission has given Royal Bank of Canada the green light to issue residential mortgage covered bonds registered in the U.S. The SEC granted permission through a no-action letter shortly after RBC submitted plans for a program through which covered bonds backed by U.S. home loans will be offered to U.S. investors. RBC is a “foreign private issuer” under U.S. securities laws and, as a Form S-3 issuer, has a registered shelf with the SEC through which it can offer multiple securities on an immediate, continuous or even on a delayed basis. Covered bonds are debt securities backed by cash...

Banks and thrifts held $150.1 billion of non-mortgage ABS in their investment portfolios at the end of the first quarter of 2012, according to a new Inside MBS & ABS analysis of call report data. Commercial banks accounted for $135.4 billion of that amount, which was down 2.1 percent from the end of last year. Thrifts did not report their ABS holdings until the first quarter of 2012. The biggest category of bank and thrift ABS holdings were consumer loans – mostly student loans – which accounted for 32.6 percent of the institutions’ ABS investments. Credit card ABS...(Includes one data chart)

Improved subprime performance and a lack of new originations have prompted major nonbank firms involved in subprime servicing to expand their portfolios with acquisitions of nonperforming agency mortgages. Ocwen Financial, Nationstar Mortgage and Walter Investment Management, among others, have all recently acquired large volumes of nonperforming agency mortgages. An estimated $525.0 billion in subprime mortgages were outstanding as of the end of the first quarter of 2012, according to an Inside Nonconforming Markets analysis ... [Includes one data chart]

The still-developing market for real estate-owned property rentals is starting to get crowded. A number of firms have formed in recent weeks hoping to benefit from low prices on REO properties. Homebuilder Beazer Homes announced this month that it formed a private real estate investment trust to acquire, refurbish and lease single-family homes on a large scale in select markets. Beazer Pre-Owned Rental Homes was arranged by affiliates of Kohlberg Kravis Roberts & Co. and has approximately $85 million in funding ...

Fannie Mae and Freddie Mac have made significant progress in recovering from the losses on the nonprime mortgages they purchased and guaranteed before 2009. In the first quarter of 2012, both of the government-sponsored enterprises touted that mortgages acquired in and after 2009 now account for the majority of their single-family holdings. The GSEs held a combined $386.01 billion in nonprime purchased/guaranteed mortgages as well as nonprime mortgage-backed securities at the end of the first quarter of 2012 ... [Includes one data chart]

Real estate industry groups are urging the FHA to align a forthcoming proposed rule for private transfer fees with a final rule recently adopted by the Federal Housing Finance Agency. In a joint letter to Acting FHA Commissioner Carol Galante, the National Association of Realtors and the Institute of Real Estate Management expressed support for the FHFA rule on transfer-fee covenants and asked that a mortgagee’s compliance with the FHFA rule be deemed as compliance with the FHA’s own rule regarding such covenants. The two groups urged the FHA to ...

Congress may be no closer to solving the problem of Fannie Mae and Freddie Mac than it was when the two government-sponsored enterprises were put in conservatorship in 2008, but many observers say the capabilities of the two GSEs should be preserved and improved. “Energy spent trying to get rid of Fannie Mae and Freddie Mac is a waste,” said Sean Dobson, the CEO of Amherst Securities Group, at the American Securitization Forum Annual Meeting this week in Washington. The GSEs still have sizable infrastructure for effective securitization, and “it would be a shame to take all of that and throw it away,” he...