California remains the top source of new single-family mortgages for Fannie and Freddie, even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an Inside The GSEs analysis. A total of $132.2 billion of home loans on Golden State properties were securitized by the two GSEs during the first six months of 2012, accounting for 22.9 percent of their total business for the half year. That was up 46.7 percent from total California production during the first six months of 2011 as the overall GSE market rose 38.8 percent from a year ago.

The one-time funding vehicle of defunct and disgraced mortgage servicer Taylor, Bean & Whitaker Mortgage Corp. has asked a bankruptcy court for permission to investigate Freddie Mac and its regulator, the Federal Housing Finance Agency. According to documents filed earlier this month in U.S. Bankruptcy Court in Jacksonville, FL, Ocala Funding LLC wants to examine an $805 million transfer made to Freddie by TBW executives before the servicer collapsed with the goal of recovering assets for its creditors. TBW imploded in 2009 after federal authorities discovered that Taylor Bean defrauded Freddie, among others, to the tune of $3.0 billion. A number of TBW executives were convicted and sent to jail for their part in the fraud scheme, including former owner and CEO Lee Farkas, who was sentenced to 30-years in prison last year.

The Federal Home Loan Bank system is one of three potential hosts for a proposed new refinance program unveiled this week by a Senate Democrat aimed at rescuing underwater homeowners without direct federal assistance. Oregon Sen. Jeff Merkley’s proposal – spelled out in a white paper titled “The 4% Mortgage: Rebuilding American Homeownership” – would create a temporary government-backed trust to purchase eligible mortgages issued by private lenders. The RAH Trust would be funded by the federal government’s sale of bonds to investors. The plan would allow underwater borrowers who are current on their mortgages to refinance at a lower interest rate.

A bill introduced in the House earlier this month would allow privately-insured credit unions access to the Federal Home Loan Bank system for the first time. H.R. 6105, introduced by Rep. Steve Stivers, R-OH, would amend the Federal Home Loan Bank Act to allow non-federally-insured credit unions to become members of one of the 12 FHLBanks. Currently, only federally insured credit unions can access the FHLBanks’ low-cost, secured funds, and certain requirements must be met.

There appear to be no immediate plans to move the GSEs beyond conservatorship status but news this week that the Federal Housing Finance Agency is actively investigating the possibilities of receivership may be designed to attract the attention of thus far indifferent policymakers and snap official Washington into action, say industry experts. The FHFA this week confirmed that it has commissioned the consulting firm PricewaterhouseCoopers to create contingency plans for taking Fannie Mae, Freddie Mac and the Federal Home Loan Banks into receivership. A Finance Agency spokesman said the hiring of PwC, which was not officially announced, is just one of a number of “ordinary regulatory activities” that the FHFA is authorized and obligated to pursue under the authority granted the agency by the Housing and Economic Recovery Act of 2008.

The investor group that had been seen as the most formidable opponent to Bank of America’s proposed $8.5 billion MBS settlement pulled out of the fight this week. Walnut Place submitted a motion to New York State Supreme Court Judge Barbara Kapnick, which she granted, to formally withdraw its objection to the BofA settlement. “Walnut Place respectfully requests that it be permitted to withdraw as an intervenor in this proceeding,” the investor group wrote to the judge. Walnut Place, which represents...

The Federal Housing Finance Agency has not “effectively employed” its monitoring and supervision of Fannie Mae and Freddie Mac risk related to real estate owned properties, according to the FHFA’s Office of Inspector General. “The FHFA will benefit from a more comprehensive REO risk assessment and from using the assessment to enhance its planning and supervisory activities,” said the OIG. “A more comprehensive assessment of the risks associated with [Fannie’s and Freddie’s] shadow REO inventory can help the FHFA provide for the enterprises’ safety and soundness and help protect the taxpayers from undue losses by ensuring the agency focuses on its supervision where it can best mitigate risks.” From 2007 through 2011, the GSEs’ combined REO inventory rose...

The Federal Housing Finance Agency has hired PricewaterhouseCoopers to develop a plan for taking Fannie Mae, Freddie Mac and the Federal Home Loan Banks into receivership. The FHFA reports it has entered into a contract with PricewaterhouseCoopers to create a blueprint for liquidating Fannie, Freddie or any of 12 Federal Home Loan Banks, if ever necessary. But it is all part of routine planning activity under the agency’s mission, said a spokesperson. “The FHFA has engaged in...

Lenders’ experiences with repurchase requests from the government-sponsored enterprises appear to have diverged in recent months, with big banks emerging fairly confident in their dealings with the GSEs. Other lenders, meanwhile, appear to have started to have significant interactions with Fannie Mae and Freddie Mac on the issue only recently. Wells Fargo had a decrease in GSE repurchase requests in the second quarter of 2012 compared with the previous quarter but the lender increased its repurchase reserves by $239 million during that time due to an increase in expected demands from the GSEs regarding 2006 to 2008 vintages. “We continue to see...

Record low interest rates and loosened underwriting guidelines have induced strong refinance activity during the first half of 2012. Industry participants agree that the refi boom will continue through the third quarter of 2012, but then predictions get hazy. During Wells Fargo’s earnings presentation for the second quarter last week, Timothy Sloan, a senior executive vice president and CFO at the bank, downplayed suggestions that refi activity has declined this month compared with June. “The business is good and we’re optimistic about it,” he said. “Very optimistic,” added...