Look for the Federal Housing Finance Agency to press its multiple legal actions against many of the nation’s biggest issuers of non-agency mortgage-backed securities after a federal judge rejected a bid by UBS Americas to turn back the FHFA’s lawsuit over its sale of non-agency MBS to Fannie Mae and Freddie Mac. Judge Denise Cote, of the U.S. District Court for the Southern District of New York, two weeks ago denied UBS’ motion to dismiss on statute of limitations grounds, while dismissing the FHFA’s negligent misrepresentation claims. The FHFA, as GSE conservator, sued UBS in July 2011 alleging that billions of dollars of MBS purchased by Fannie and Freddie were based on offering documents that contained “materially false statements and omissions.”

The Federal Housing Finance Agency is requesting public comment on its draft document Strategic Plan: Fiscal Years 2013-2017. The FHFA said it’s updating its plan in order to incorporate the strategic plan for conservatorships of Fannie Mae and Freddie Mac that the Finance Agency sent to Congress in February.

Fannie Mae received a leg up earlier this month in its defense against a former staffer’s wrongful termination lawsuit when a federal judge ruled that the GSE is not legally considered a government entity while under the conservatorship of its regulator, the Federal Housing Finance Agency. Caroline Herron, a former Fannie vice president who left in 2007 but returned as a consultant in 2009, filed suit against the GSE in June 2010. Herron claims she was wrongly fired for reporting what she said was Fannie’s mismanagement of the Obama administration’s housing rescue initiatives. According to papers filed in U.S. District Court for the District of Columbia, Herron sought to prove that Fannie was not a private company but an adjunct of the state while under FHFA conservatorship as part of her claim against Fannie. Herron asserted a Bivens claim, a claim under the First Amendment for private damages against federal officials for civil rights violations outside the purview of the Federal Tort Claims Act.

Two separate working papers by Federal Reserve economists conclude that the two government-sponsored enterprises were not significantly responsible for the financial crisis of 2008, and that GSE mortgage standards had only a “modest impact” on loan terms in the years leading up to the mortgage meltdown. Fed economist Valentin Bolotnyy estimates that only 2.5 percent to 5.0 percent of additional credit to high-risk borrowers was made available to meet the GSEs’ Underserved Area Goals, a subset of the Affordable Housing Goals mandated by Congress in 1992. “The results suggest a small UAG effect and...

While many of the largest mortgage lenders in the industry continue to scale back their operations in a somewhat precarious operating environment, a few companies see opportunity in the reshuffling and are hitting the gas pedal. None more than Nationstar Mortgage. Fresh off an initial public offering, the company has been on a buying spree for mortgage servicing and production capacity. Although Nationstar ranked as the 11th largest servicer in the market at the end of March, pending acquisitions would push it all the way to fourth place on a pro forma basis, according to a new...(Includes one data chart)

Mortgage servicers reported significant improvement in loan delinquency rates during the first quarter of 2012, although the inventory of foreclosed units remained at historically high levels. The overall delinquency rate dropped 100.3 basis points to 9.88 percent as of the end of March, according to the Inside Mortgage Finance Large Servicer Delinquency Index. That was the lowest level for the series in three years, and all 18 lenders included in the index reported lower delinquency rates than they had at the end of 2011. The biggest declines were in...(Includes two data charts)

A decline in Fannie Mae’s inventory of single-family real estate owned homes coupled with improved REO sale prices played a significant role in the company’s first free-and-clear profit since going into government conservatorship. Freddie Mac also reported improved REO disposition activity during the first quarter of 2012. Fannie said it acquired 47,700 single-family properties during the first quarter compared to 47,256 in the fourth quarter of 2011 and 53,549 in the first quarter of 2011. The government-sponsored enterprise disposed of 52,071 single-family REO during the first three months of 2012...

The Mortgage Bankers Association is pushing a proposal to change the remittance schedule on Freddie Mac participation certificates and make them fully fungible with Fannie Mae pass-through MBS for good delivery under to-be-announced guidelines. The proposal would address the historical discount to Fannie MBS at which Freddie securities trade, said MBA President Dave Stevens during the group’s National Secondary Market Conference in New York this week. Freddie PCs typically trade 1 or 1.5 points behind Fannie MBS, a difference that Freddie Mac – and ultimately U.S. taxpayers, now that the government-sponsored...

The massive legal action initiated by the Federal Housing Finance Agency last summer against many of the nation’s biggest lenders has survived its first legal challenge relatively unscathed following a federal judge’s rejection of the defendant’s motion to dismiss. Judge Denise Cote of the U.S. District Court for the Southern District of New York last week denied UBS Americas’ motion to dismiss on statute of limitations grounds. The ruling permits the FHFA to proceed full steam ahead with its claim that UBS violated federal securities laws by misleading Fannie Mae and Freddie Mac into purchasing $6.4...

The retained mortgage investment portfolios of Fannie Mae and Freddie Mac have been reliable generators of net income over the past few years, but the government-sponsored enterprises continue to shrink the profit centers under the terms of their federal bailout. Fannie and Freddie held a combined $1.310 trillion in mortgage-related investments at the end of the first quarter of 2012, down 3.8 percent from the previous quarter. The GSEs’ combined portfolios were down 9.6 percent from the same period in 2011; their agreements with the Treasury Department call for annual...(Includes one data chart)