By the end of 2012, the Federal Housing Finance Agency will see a plan for a new mortgage securitization platform as a key component in its strategic plan for the conservatorships of the two government-sponsored enterprises, even as analysts warn that transferring credit risk from the GSEs to private investors is fraught with hazard. Late last week, the FHFA unveiled a new “conservatorship scorecard” that provides more details about the agency’s revamped strategic plan for a post-Fannie and Freddie secondary market. “It’s important to see the scorecard itself as further evidence of our commitment to the work...

More than half of the government-sponsored enterprises’ single-family guarantee book of business during the fourth quarter of 2011 consisted of loans it had purchased or guaranteed since the start of 2009, which has prompted Fannie Mae and Freddie Mac to declare the companies’ efforts to reduce the credit losses on their legacy books of business a success so far. Freddie reported $619 million in net income during the fourth quarter, compared to a net loss of $4.4 billion during the third quarter. For the full year, the GSE reported a net loss of $5.3 billion compared to a net loss of...(Includes one data chart)

The Depository Trust & Clearing Corp. announced this week that its Fixed Income Clearing Corp. subsidiary will begin functioning as a new central counterparty, or CCP, designed to reduce risk and costs in the $100-trillion-a-year market for U.S. MBS, starting in April, following the Securities and Exchange Commission’s approval of the proposal. Company officials say the CCP will guarantee settlement of all matched MBS trades, which industry representatives see as a crucial step for the securities industry where the settlement of an MBS trade often does not take place until months after the trade itself was made...

The volume of residential MBS in the market fell again in the fourth quarter of 2011, sustaining a nearly constant decline that’s been underway since the midway point in 2009. A total of $6.437 trillion single-family MBS were outstanding as of the end of last year, down 1.7 percent from the third quarter. The last time there was growth in the supply of MBS was in the second quarter of last year. The major factor is the ongoing decline in the supply of home mortgages, which fell 0.5 percent in the fourth quarter and 2.2 percent over the full year in 2011. Mortgage collateral has... (Includes one data chart)

Fannie Mae and Freddie Mac anticipate continued losses on their holdings of nonprime mortgages and mortgage-backed securities in 2012 and beyond. However, the government-sponsored enterprises will soon shift from run-off mode and consider selling some of the nonperforming assets. The GSEs held a combined $398.45 billion in nonprime purchased/guaranteed mortgages as well as nonprime MBS at the end of 2011, according to a new analysis by Inside Nonconforming Markets. That was down 16.3 percent from the end of 2010. Fannie accounted for 56.3 percent of the GSEs' total non-prime holdings, with purchased/ guaranteed loans accounting for 71.4 percent of the GSEs' total non-prime holdings ... [Includes one data chart]

Walter Investment Management is looking to leverage its subservicing relationships with the government-sponsored enterprises and avoid bidding wars to grow its servicing portfolio, according to officials at the special servicer. The company handled an $86 billion portfolio at the end of 2011, predominantly subserviced for others and added $57 billion in servicing during the year, all on a subservicing basis. Some $750 billion in mortgages are currently in the pipeline to potentially be transferred to special servicers, according to Denmar Dixon, vice chairman and executive vice president at Walter. The loans include potential sales of mortgage servicing rights as well as subservicing opportunities ...

Failure by the five largest FHA mortgage servicers to establish effective controls and to comply with FHA foreclosure procedures resulted in improper servicing practices that may have exposed them to liability under the False Claims Act, the Department of Housing and Urban Development’s Office of the Inspector General concluded in separate, recently released audits. The HUD-OIG audits of the top five FHA servicers – Bank of America, Ally Financial, Wells Fargo, CitiMortgage and JPMorgan Chase – revealed a variety of questionable foreclosure practices involving the use of foreclosure “mills” and robo-signing of sworn documents in thousands of foreclosures throughout the country. The audits were ...

Ginnie Mae will question certain mortgage-backed securities issuers about reporting inconsistencies in pool data submissions over the last couple of months and try to resolve those issues to avoid delay in MBS pool processing. In an audio conference with issuers last week, Ginnie Mae officials said agency staff discovered the flawed data submissions while poring over several months’ worth of pool data submitted by issuers. While most of the information fell within theVargas said the discrepancies were attributed to a small group of issuers, who will be contacted soon to work on corrections before Ginnie Mae puts stronger edits up front. She said the agency wants to ...

Mortgage lenders appeared to have no problem taking up the slack after Fannie Mae and Freddie Mac high-cost loan limits were lowered in the fourth quarter of 2011. Fannie Mae, Freddie Mac and Ginnie Mae financed 36.6 percent of the loans exceeding $417,000 that were originated in the fourth quarter of last year, according to a new Inside Mortgage Finance analysis. That was down from a 42.7 percent agency share of the jumbo market in the previous quarter. The key factor was the reduction in the top Fannie/Freddie loan limit from $729,750 to $625,500, which (Includes two data charts)...

Fannie Mae and Freddie Mac executives will take home significantly less compensation during 2012, even as staffers at the taxpayer-subsidized companies will be monetarily rewarded for hitting performance goals – though they won’t be called bonuses – under a new plan unveiled late last week by the Federal Housing Finance Agency. The FHFA’s 2012 executive compensation program reduces top executive pay at the government-sponsored enterprises by nearly 75 percent from pre-conservatorship levels, while it totally eliminates bonuses and establishes a “six-figure” pay target for the executive positions...