The Government Accountability Office has cited “opportunities for improvement” in the Federal Housing Finance Agency’s internal controls in a recent report, including a still pending recommendation to beef up the FHFA’s information security controls. Mandated by the Housing and Economic Recovery Act of 2008, the GAO said its audit of the Finance Agency’s fiscal years 2011 and 2010 revealed that the FHFA had not fully implemented its information security program as per GAO’s recommendations in previous reports, resulting in “several new information systems vulnerabilities” over the last year.

A bill filed in the Senate two weeks ago would require mortgage servicers to respond to a short-sale offer within 30 days and make a final decision on acceptance within 60 days of receiving a purchase offer. The Stopping Ongoing Lender Delays (SOLD) Act, S. 3177, sponsored by Sen. Dean Heller, R-NV, would amend the Truth in Lending Act to require servicers to provide prompt responses to homeowners seeking to refinance or “for other purposes” including short sales. “By placing a shot clock on these decisions, it will reduce the amount of time it takes to sell a property, improve the likelihood that the transaction will close, and reduce the number of foreclosures in Nevada and across the country,” Heller said in a Senate floor speech on May 15. “Stability in the housing market is critical for long-term growth.”

Although at least one Senate Republican shows interest in a plan to expand the Home Affordable Refinance Program, the outlook for Congressional action remains doubtful and House Democrats are pushing the Federal Housing Finance Agency to make further HARP changes administratively. During a Senate Banking, Housing and Urban Affairs Committee hearing last week on legislation to expand HARP, Sen. Bob Corker, R-TN, said he was open to the proposal. “I hope that we’ll have a real mark-up on this bill,” he said. Senate Democrats Robert Menendez (NJ) and Barbara Boxer (CA) have introduced legislation...

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 ...